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The following are the selling price, variable costs, and contribution margin for one unit of each of Banner Company's three products: A B, and C:
The following are the selling price, variable costs, and contribution margin for one unit of each of Banner Company's three products: A B, and C: Product Selling price $130.00 $140.00 $140.00 Variable costs: Direct materials Direct labour Variable manufacturing overhead 64.50 15.00 5.00 44.00 0.00 10.00 84.80 12.00 4.00 Total variable cost 84.50 84.00 100.80 Contribution margin S 45.50 S 56.00 S 39.20 Contribution margin ratio 35% 40% 28% Due to a strike in the plant of one of its competitors, demand for the company's products far exceeds its capacity to produce. Management is trying to determine which product(s) to concentrate on next week in filling its backlog of orders. The direct labour rate is $6 per hour, and only 3,170 hours of labour time are available each week Required 1. Compute the amount of contribution margin that will be obtained per hour of labour time spent on each product (Round your intermediate calculations to 1 decimal place. Round your answers to2 decimal places.) Contribution margin per abour hour 2. Which orders would you recommend that the company work on next week-the orders for product A, product B, or product C? O Product C O Product B O Product A
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