SON-7742 Inc. produces Products X5, Y8, and Z9. The following table provides per unit information relating to
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SON-7742 Inc. produces Products X5, Y8, and Z9. The following table provides per unit information relating to the three products:
Product | |||
---|---|---|---|
X5 | Y8 | Z9 | |
Selling price | $ 90.00 | $ 60.00 | $ 80.00 |
Variable expenses: | |||
Direct materials | 27.00 | 15.00 | 9.00 |
Other variable expenses | 27.00 | 30.00 | 47.00 |
Total variable expenses | 54.00 | 45.00 | 56.00 |
Contribution margin | $ 36.00 | $ 15.00 | $ 24.00 |
Contribution margin ratio | 40% | 25% | 30% |
JSON-7742 has enough demand to sell 850 units of each product per month. Each product requires the same direct materials in its production. The direct materials cost $3 per pound. The company will at most have 5,700 pounds of the direct materials available every month.
What is the maximum contribution margin that JSON-7742 can earn per month using its 5,700 pounds of direct materials optimally?
Related Book For
Managerial accounting
ISBN: 978-0471467854
1st edition
Authors: ramji balakrishnan, k. s i varamakrishnan, Geoffrey b. sprin
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