Which orders would you suggest company to accept first, Ask an Expert

Accounting

Q1) Benoit Company manufactures three products, A, B, and C. Data concerning three products follow (per unit):

	Product
	A	B	C
Selling price	$80	$56	$70
Less variable expenses:
Direct materials	24	15	9
Other variable expenses	24	27	40
Total variable expenses	48	42	49
Contribution margin	$32	$14	$21
Contribution margin ratio	40%	25%	30%

Demand for company products is very strong, with far more orders each month than company has raw materials available to produce. Same material is utilized in each product. Material costs $3 per pound with maximum of 5,000 pounds available each month.

problem:

Which orders would you suggest company to accept first, those for A, for B, or for C? Which orders second? Third?

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M918789

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