Benoit company produces three products—a, b, and c. data concerning the three products follow (per unit): product a b c selling price $ 80.00 $ 62.00 $ 81.00 variable expenses: direct materials 24.00 18.00 9.00 other variable expenses 24.00 25.40 43.65 total variable expenses 48.00 43.40 52.65 contribution margin $ 32.00 $ 18.60 $ 28.35 contribution margin ratio 40 % 30 % 35 % the company estimates that it can sell 800 units of each product per month. the same raw material is used in each product. the material costs $3 per pound with a maximum of 5,000 pounds available each month. required: 1. calculate the contribution margin per pound of the constraining resource for each product. 2. which orders would you advise the company to accept first, those for a, b, or c? which orders second? third?

My answer is: Produce Product C first, then followed by Product A. to maximize contribution margin. Product B will not be produced since the maximum number of pounds has already been used in producing Products C and A.

PER UNIT
PRODUCT                              A               B                C
SELLING PRICE                   80              62                81
VARIABLE EXPENSES
DIRECT MATERIALS            24             18                  9
OTHER VAR EXP.                 24             25.4             43.65
TOTAL VAR EXP                   48             43.4             52.65
CONTRIBUTION MARGIN    32             18.6             28.35
CM RATIO                             0.4             0.3                0.35

COMPANY CAN SELL 800 UNITS OF EACH PRODUCT PER MONTH.
SAME RAW MATERIAL IS USED IN EACH PRODUCT.
MATERIAL COSTS 3 PER POUND W/ A MAX OF 5,000 POUNDS EACH MONTH

PRODUCT      DM     UNIT COST         NO. OF LBS
A                      24            3                             8
B                      18            3                             6
C                        9            3                             3
PRODUCT NO. OF LBS/UNIT     MAX UNITS      TOTAL NO. OF LBS
A                       8                                800                    6400
B                       6                                800                    4800
C                       3                                800                    2400
TOTAL                                                                         13600
LIMITATION: 5,000 POUNDS PER MONTH ONLY.

required: 
1. calculate the contribution margin per pound of the constraining resource for each product. 
2. which orders would you advise the company to accept first, those for a, b, or c? which orders second? third?

PLS. SEE ATTACHMENTS FOR MY FULL COMPUTATIONS. 

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