Answer:
Calculate the contribution margin per pound for each of the three products.
- K1 = $17.80 per lb
- S5 = $8.70 per lb
- G9 = $10.50 per lb
Orders for which product should be produced and filled first, then second, and then third?
- K1 orders should be placed first, G9 orders should be placed second and S5 orders should be placed last.
Explanation:
52,900 pounds of material are available
- K1 uses 5 pounds of the material
- S5 uses 2.7 pounds of the material
- G9 uses 5.3 pounds of the material
contribution margin per unit:
- K1 = sales price - variable costs = $172 - $89 = $89
- S5 = $100.49 - $77 = $23.49
- G9 = $189.65 - $134 = $55.65
contribution margin per pound of material:
- K1 = $89 / 5 lbs = $17.80 per lb
- S5 = $23.49 / 2.7 lbs = $8.70 per lb
- G9 = $55.65 / 5.3 lbs = $10.50 per lb