Barlow Company Manufactures Three Products A B And C The Selling Price Variable Costs And Contribution Margin For O 1 (196.13 KiB) Viewed 31 times
Barlow Company manufactures three products-A, B, and C. The selling price, variable costs, and contribution margin for one unit of each product follow: A $ 180 Product B $ 270 с $ 240 Selling price Variable expenses: Direct materials Other variable expenses Total variable expenses Contribution margin 24 102 126 80 90 170 32 148 180 $ 54 $ 100 $ 60 Contribution margin ratio 30% 37% 25% The same raw material is used in all three products. Barlow Company has only 6,000 pounds of raw material on hand and will not be able to obtain any more of it for several weeks due to a strike in its supplier's plant. Management is trying to decide which product(s) to concentrate on next week in filling its backlog of orders. The material costs $8 per pound.
2. Assuming that Barlow has unlimited demand for each of its three products, what is the maximum contribution margin the company can earn when using the 6,000 pounds of raw material on hand?
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