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Compute contribution margin per pound of materials used

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Reference no: EM13509363

Product X
Product Y
Product Z
Selling price $ 80

$ 56

$ 70

Variable expenses:










Direct materials
24


15


9
Labor and overhead
24


27


40

Total variable expenses
48


42


49

Contribution margin $ 32

$ 14

$ 21












 

Contribution margin ratio 40 25 30

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:

a. Compute contribution margin per pound of materials used.

 

Reference no: EM13509363

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