Benoit Company produces three products, A, B, and C. Data concerning the three products follows (per unit):

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 $3 per pound with a maximum of 5,000 pounds available each month.

Required:

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

Transcribed Image Text:

Product A Selling price S80 $56 S70 Variable expenses: Direct materials 24 15 40 Other variable expenses 24 27 Total variable expenses 48 42 49 Contribution margin $32 S14 $21 40% 25% 30% Contribution margin ratio