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In need of answer 3 only Exercise 12-8 Volume Trade-Off Decisions [LO12-5, LO12-6] Barlow Company manufactures three products-A, B, and C. The selling price, variable
In need of answer 3 only
Exercise 12-8 Volume Trade-Off Decisions [LO12-5, LO12-6] Barlow Company manufactures three products-A, B, and C. The selling price, variable costs, and contribution margin for one unit of each product follow: Product Selling price Variable expenses: $180 300 $250 Direct materials 90 210 $ 40 $ 90 20 30 120 L84 12214 Other variable expenses Total variable expenses Contribution margin Contribution margin ratio 140 36 22% 30% 14% The same raw material is used in all three products. Barlow Company has only 5,400 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 material costs $10 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 Required 1Required 2 Required 3Required 4 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 5,400 pounds of raw material on hand? Maximum contribution marginStep by Step Solution
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