Barlow Company manufactures three products—A, B, and C. The
Selling price, variable cost, and contribution margin per unit
Follow these steps to learn more about each product
|Price of sale||$||180||$||300||$||240|
|Total variable expenses||144||210||204|
|Margin of contribution||$||36||$||90||$||36|
|Ratio of contribution margin||20||%||30||%||15||%|
All three products use the same raw material. Barlow
Only 6,300 pounds are available for the company’s raw material.
You won’t be able get any more for several weeks because of a strike
in its supplier’s plant. Managers are trying to decide who
Product(s) that will focus on the next week to fill its backlog
orders. It costs $9 per pound.
1. Calculate the contribution margin for each pound
Limiting resources for every product
2. If Barlow can meet every demand, it would be an inexhaustible supply
How many products do you have?
You can make as much as 6,300 pounds with the raw material you already have.
3. Assuming that Barlow’s estimated customer demand is 600 units
What is the maximum margin of contribution per product line?
The raw material can be used to make a company’s earnings of 6,300 pounds
4. Barlow could be supplied with more by a foreign supplier
The stock of the raw materials is at an unusually high premium than the average
price. Assuming Barlow’s estimated customer demand is 600 units per
Product line, and how the raw material of 6,300 pounds has been used by the company
Material in the best fashion. What is the most expensive Barlow?
A company should offer to buy an extra pound
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