Assume that a company makes three products-Product A, Product B, and Product C-and provides the following information with respect to those products: Selling price. Variable costs per unit: Direct materials. Direct labor Variable overhead Total variable cost per unit. Contribution margin per unit. $14.00 $20.00 Product A $70 $15.00 16 40 2 58 $12 Product B $75 24 28 2 54 $21 The company incurs total fixed costs of $50,000. The maximum demand for each of its products is 600 units. Its direct material cost is $8.00 per pound. The company has only 1,400 pounds of direct materials available for production. Assuming the company has made optimal use of its 1,400 pounds off direct material, what is the maximum amount per pound the company should be willing to pay for additional direct materials? Product C $85 20 32 3 55 $30
Assume that a company makes three products-Product A, Product B, and Product C-and provides the following information with respect to those products: Selling price. Variable costs per unit: Direct materials. Direct labor Variable overhead Total variable cost per unit. Contribution margin per unit. $14.00 $20.00 Product A $70 $15.00 16 40 2 58 $12 Product B $75 24 28 2 54 $21 The company incurs total fixed costs of $50,000. The maximum demand for each of its products is 600 units. Its direct material cost is $8.00 per pound. The company has only 1,400 pounds of direct materials available for production. Assuming the company has made optimal use of its 1,400 pounds off direct material, what is the maximum amount per pound the company should be willing to pay for additional direct materials? Product C $85 20 32 3 55 $30
Chapter5: Process Costing
Section: Chapter Questions
Problem 1PA: The following product Costs are available for Haworth Company on the production of chairs: direct...
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