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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?

Accounting Basics, Accounting

  • Category:- Accounting Basics
  • Reference No.:- M918789

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