Problem 7 SmithJones Company manufactures three products: A, B, and C. The selling price, variable costs, and contribution margin for one unit of each product follow: Product $180 $270 $240 32 Selling price Less variable expenses: Direct materials Other variable expenses Total variable expenses Contribution margin 102 126 $54 162 148 180 $60 $108 Contribution margin ratio 30% 40% 25% The same raw material is used in all three products. SmithJones Company has only 5,000 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 material costs $8 per pound. Demand for each product is 700 units. A. How many pounds of material would be required to satisfy demand for all three products? This is in total, not for just one unit. Show and label your work. B. Compute the amount of contribution margin that will be obtained per pound of material used in each product. Show and label your work. C. Which product would you recommend that the company work on next week first? Second? Third? D. Based on your decision in (C), what is the maximum contribution margin the company will make next week? Show and label your work