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.
<span>
<span>
</span><span><span>
PER UNIT
</span>
<span>
PRODUCT                              A               B                C
</span>
<span>
SELLING PRICE                   80              62                81
</span>
<span>
VARIABLE EXPENSES
</span>
<span>
DIRECT MATERIALS            24             18                  9
</span>
<span>
OTHER VAR EXP.                 24             25.4             43.65
</span>
<span>
TOTAL VAR EXP                   48             43.4             52.65
</span>
<span>
CONTRIBUTION MARGIN    32             18.6             28.35
</span>
<span>
<span>CM RATIO </span>                            0.4             0.3                0.35
</span>
<span>
</span>
<span>
COMPANY CAN
SELL 800 UNITS OF EACH PRODUCT PER MONTH.
</span>
<span>
SAME RAW
MATERIAL IS USED IN EACH PRODUCT.
</span>
<span>
MATERIAL
COSTS 3 PER POUND W/ A MAX OF 5,000 POUNDS EACH MONTH
</span>
<span>
</span>
<span>
PRODUCT      DM     <span>UNIT COST </span>        NO. OF LBS
</span>
<span>
A                      24            3                             8
</span>
<span>
B                      18            3                             6
</span>
<span>
C                        9            3                             3
</span>
<span>
</span>
<span>
PRODUCT
NO. OF LBS/UNIT     MAX UNITS      TOTAL NO. OF LBS
</span>
<span>
A                       8                                800                    6400
</span>
<span>
B                       6                                800                    4800
</span>
<span>
C                       3                                800                    2400
</span>
<span>
TOTAL                                                                        
13600
</span>
<span>
LIMITATION:
5,000 POUNDS PER MONTH ONLY.
</span></span></span><span>
<span>
</span><span><span>
<span>required: </span>
</span>
<span>
<span>1. calculate
the contribution margin per pound of the constraining resource for each
product. </span>
</span>
<span>
2. which
orders would you advise the company to accept first, those for a, b, or c?
which orders second? third?
</span>
<span>
</span>
<span>
</span></span></span><span>PLS. SEE ATTACHMENTS FOR MY FULL COMPUTATIONS. </span>