xercise $13-8($Static$)$ Volume Trade$-$Off Decisions $[$LO$13-5,$ LO$13-6]$

Barlow Company manufactures three products$$A$,$ B$,$ and C$.$ The selling price, variable costs, and contribution margin for one unit of each product follow:$$

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$$ProductABCSelling price$ $180$$ $270$$ $240$Variable expenses:$$Direct materials$248032$Other variable expenses$10290148$Total variable expenses$126170180$Contribution margin$ $54$$ $100$$ $60$Contribution margin ratio$30\%37\%25\%$

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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.

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Required:

$1.$ Calculate the contribution margin per pound of the constraining resource for each product.

$2.$ 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?

$3.$ Assuming that Barlow$$s estimated customer demand is $500$ units per product line, what is the maximum contribution margin the company can earn when using the $6,000$ pounds of raw material on hand?

$4.$ A foreign supplier could furnish Barlow with additional stocks of the raw material at a substantial premium over the usual price. Assuming Barlow$$s estimated customer demand is $500$ units per product line and that the company has used its $6,000$ pounds of raw material in an optimal fashion, what is the highest price Barlow Company should be willing to pay for an additional pound of materials?