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The production department. must make a product mix decision in light of a raw material shortage. The following data is available for the products: PRODUCT
The production department. must make a product mix decision in light of a raw material shortage. The following data is available for the products:
PRODUCT A | PRODUCT B | PRODUCT C | |
Sale value per unit | $ 12.00 | $ 9.00 | $ 12.00 |
Direct materials | $ 4.00 | $ 2.00 | $ 6.00 |
Direct labor | $ 3.00 | $ 3.00 | $ 1.50 |
Variable manufacturing overhead | $ 3.00 | $ 2.00 | $ 2.50 |
Required number of pounds of direct materials per unit | 2 | 1 | 3 |
Maximum sales (in units) | 2,500 | 3,500 | 1,000 |
a. Determine the contribution margin and percentage of each product. b. Determine the number of units of products A, B, and C that must be produced if only 10,000 pounds are available for the month of direct raw material. c. The commercial manager proposes to reduce the sales values by 10% because they inform him that they have 20,000 pounds of raw material, indicate: - Contribution margin per product for every pound available - Indicate if the decision was adequate, how much useful gender
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