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Exercise 11-8 (Static) Volume Trade-Off Decisions [LO11-5, LO11-6] Barlow Company manufactures three products - A, B, and C. The selling price, variable costs, and contribution
Exercise 11-8 (Static) Volume Trade-Off Decisions [LO11-5, LO11-6] Barlow Company manufactures three products - A, B, and C. The selling price, variable costs, and contribution margin for one unit of each product follow: The same raw material is used in all three products. Barlow Company has only 6,000 pounds of raw material on hand and will not be able to obtain any more of it for several weeks due to a strike in its supplier's plant. Management is trying to decide which product(s) to concentrate on next week in filling its backlog of orders. The materia costs $8 per pound. Required: 1. Calculate the contribution margin per pound of the constraining resource for each product. 2. Assuming that Barlow has unlimited demand for each of its three products, what is the maximum contribution margin the company can earn when using the 6,000 pounds of raw material on hand
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