Question
TG corp makes 3 products (T, G, & P). The T sells for $180 with a contribution margin ratio (CMR) of 30%; the G sells
TG corp makes 3 products (T, G, & P). The T sells for $180 with a contribution margin ratio (CMR) of 30%; the G sells for $270 with a CMR of 40%; the P sells for $240 with a CMR of 25%. All three use the same direct material: T uses 3 pounds, G uses 9 pounds, and P uses 4 pounds. This direct material is a scarce resource with TG only having 5,000 pounds on hand and the next shipment weeks away. Assume all that is made can be sold immediately. Make a contribution margin table for this scenario.
What is the contribution margin per unit of the scarce resource for T?
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