Benoit Company produces three products, A, B, and C. Data concerning the three products follow (per unit):
Product
A
B
C
Selling price
$ 105
$ 85
$ 95
Variable expenses:
Direct materials
31.50
25.50
6.65
Other variable expenses
31.50
38.25
59.85
Total variable expenses
63.00
63.75
66.50
Contribution margin
$42.00
$21.25
$28.50
Contribution margin ratio
40%
25%
30%
Demand for the company's products is very strong, with far more orders each month than the company can produce with the available raw materials. The same material is used in each product. The material costs $5
per pound with a maximum of 5,500 pounds available each month.
Required:
1. Compute contribution margin per pound of materials used. (Round your intermediate calculations and final answers to 2 decimal places.)
Product A
Product B
Product C
Constitution Margin per
Pound
2. Which orders would you advise the company to accept first, those for A, for B, or for C? Which orders second? Third?
Product A
Product B
Product C
