Baker Company manufactures three products: A, B and C. The selling price, variable costs and contribution...
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Baker Company manufactures three products: A, B and C. The selling price, variable costs and contribution margin for one unit of eac product follow: Selling price Less: Variable expenses: Direct materials Direct labour Other variable expenses Total variable expenses Contribution margin A $116.00 Product B $180.00 C $150.00 16.00 55.00 22.00 12.60 12.60 12.60 54.60 49.00 73.50 83.20 116.60 108.10 $ 32.80 $ 63.40 $ 41.90 The same raw material is used in all three products and costs $4 per kilogram. Baker Company has only 6,000 kilograms of material on hand and will not be able to obtain any more material 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. Direct labour costs $14 per hour. Required: 1. Compute the amount of contribution margin that will be obtained per kilogram of material used in each product. (Do not round intermediate calculations. Round your answers to 2 decimal places.) Contribution margin per kilogram A B 2. Which orders would you recommend that the company work on next week-the orders for product A, product B or product C? O Product A O Product B O Product C Baker Company manufactures three products: A, B and C. The selling price, variable costs and contribution margin for one unit of eac product follow: Selling price Less: Variable expenses: Direct materials Direct labour Other variable expenses Total variable expenses Contribution margin A $116.00 Product B $180.00 C $150.00 16.00 55.00 22.00 12.60 12.60 12.60 54.60 49.00 73.50 83.20 116.60 108.10 $ 32.80 $ 63.40 $ 41.90 The same raw material is used in all three products and costs $4 per kilogram. Baker Company has only 6,000 kilograms of material on hand and will not be able to obtain any more material 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. Direct labour costs $14 per hour. Required: 1. Compute the amount of contribution margin that will be obtained per kilogram of material used in each product. (Do not round intermediate calculations. Round your answers to 2 decimal places.) Contribution margin per kilogram A B 2. Which orders would you recommend that the company work on next week-the orders for product A, product B or product C? O Product A O Product B O Product C
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