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Inc. produces Products X5, Y8, and Z9. The following table provides per unit information relating to the three products: Inc. has enough demand to sell
Inc. produces Products X5, Y8, and Z9. The following table provides per unit information relating to the three products:
Inc. has enough demand to sell 1,000 units of each product per month. Each product requires the same direct materials in its production. The direct materials cost $3 per pound. The company will at most have 6,600 pounds of the direct materials available every month.
What is the maximum contribution margin that inc. can earn per month using its 6,600 pounds of direct materials optimally?
Selling price Variable expenses: Direct materials Other variable expenses Total variable expenses Contribution margin Contribution margin ratio X5 $72.00 21.60 21.60 43.20 $28.80 40% Product Y8 $ 60.00 18.00 27.00 45.00 $15.00 25% Z9 $ 62.00 9.00 34.40 43.40 $18.60 30%
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First lets calculate the contribution margin for each product Product X5 Selling Price 72 Variable E...Get Instant Access to Expert-Tailored Solutions
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