Ile cusrent ACC 1820-Principles of Managerial Accounting Name: in-class activity # 20-volume Trade-Off Decisions EXERCISE 11-8 Volume Trade-Off Decisions Barlow Company manufactures three products-A, B, and C. The selling price, variable costs, and contribution margin for one unit product follow Product Selling price Variable expenses: Direct materials Other variable expenses Total variable expenses Contribution margin Contribution margin ratio $180 $270 $240 24 102 126 $54 30% 80 32 90 148 170 180 $ 60 25% $ 100 37% nds of raw The same raw material is used in all three products. Barlow Com material on hand and will not be able to obtain any more of it for several weeks due to a strike in its ment is trying to decide which product(s) to concentrate on next week in supplier's plant. Ma filling its backlog of orders. The material costs $8 per pound. 1. Calculate the contribution margin per pound of the constraining resource for each product. 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? 2. 3. Assuming that Barlow's estimated customer demand is 500 units per product line, what is the maximum contribution margin the company can earn when using the 6,000 pounds of raw material on hand? 2 0.5 1,300,000 900,000400,000 800,000 2,200,000 1,400,000 in the