Takara produces Products A, B, and C. The following table provides per unit information relating...
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Accounting
Takara produces Products A, B, and C. The following table provides per unit information relating to the three products:
Product
A
B
C
Selling price
$ 80.00
$ 54.00
$ 80.00
Variable expenses:
Direct materials
24.00
18.00
12.00
Other variable expenses
24.00
25.20
44.00
Total variable expenses
48.00
43.20
56.00
Contribution margin
$ 32.00
$ 10.80
$ 24.00
Contribution margin ratio
40%
20%
30%
Takara has enough demand to sell 850 units of each product per month. Each product requires the same direct materials in its production. The direct materials cost $3 per pound. The company will at most have 7,000 pounds of the direct materials available every month.
What is the maximum contribution margin that Takara can earn per month using its 7,000 pounds of direct materials optimally?
$ 34,800
$ 37,300
$ 14,400
$ 20,400
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