Finding which orders would we advise the company to accept

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Finding which orders would we advise the company to accept first,

Benoit Company produces three products, A, B, and C. Data concerning the three products follow (per unit):

 

Product

 

A

B

C

Selling price

$80

$56

$70

Less variable expenses:

 

 

 

Direct materials

24

15

9

Other variable expenses

24

27

40

Total variable expenses

48

42

49

Contribution margin

$32

$14

$21

Contribution margin ratio

40%

25%

30%

Demand for the company products is very strong, with far more orders each month than the company has raw materials available to produce. 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:

Which orders would you advise the company to accept first, those for A, for B, or for C? Which orders second? Third?

Reference no: EM13355962

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