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/She Problem 5-Utilization of a Constrained Resource (10 points Jeanke Company manufactures three products: A, B, and C. The selling price, variable costs, and contribution
/She Problem 5-Utilization of a Constrained Resource (10 points Jeanke Company manufactures three products: A, B, and C. The selling price, variable costs, and contribution margin for one unit of each product follow: Product $240 S180 $270 Selling price Less variable expenses: 32 Direct materials 24 148 Other variable expenses 102 90 Total variable expenses 126 162 Contribution margin $54 $108 180 $60 25% 40% Contribution margin ratio 30% The same raw material is used in all three products. Jeanke Company has only 5,000 pounds of raw material on hand and will not be able to obtain any more ofit 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 per week. uired. 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. And the total for all three added together b. Compute the amount of contribution margin that will be obtained per pound of material used in each product. c. Which product would you recommend that the company work on next week first? Second? Third
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