Finding which orders would we advise the company to accept

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Reference no: EM13355962

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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