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I need C Soultion pls! B C Selling Price 92 132 121 13 35 171 49 47 75 Less: Variable Expenses Direct Materials Other Variable
I need C Soultion pls!
B C Selling Price 92 132 121 13 35 171 49 47 75 Less: Variable Expenses Direct Materials Other Variable Expenses Total Variable Expenses Contribution Margin Contribution Margin Ratio 62 82 92 50 29 30 33% 38% 24% A B C 13 35 4 4 SOLUTIONS Direct Materials Cost per KG KG required per unit Contribution Margin per unit CM Margin per KG used 3.25 8.75 30 50 9.23 $ 5.71 AB Company manufactures 3 products: B Selling Price 92 132 121 35 17 13 49 47 75 Less: Variable Expenses Direct Materials Other Variable Expenses Total Variable Expenses Contribution Margin Contribution Margin Ratio 82 92 62 30 33% 50 29 38% 24% The same raw materials is used in all 3 products and AB Company only has 5000 kilograms of material on hand and will not be able to obtain any more material for several weeks due to a strike in its supplier's plant. Management is trying to decide which products to concentrate on next week in filling its backlog of orders. The material costs $4 per kilogram. 1. Compute the amount of Contribution Margin that will be obtained per kilogram of material used in each product. 2. Which orders whould you recommend that the company work on next week - the orders of product A, product B or product C? Show Computations Step by Step Solution
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