Please Answer all the parts here: There six parts for one question 6 Barlow Comp
ID: 2580496 • Letter: P
Question
Please Answer all the parts here: There six parts for one question
6 Barlow Company manufactures three products-A. B. and C. The selling price. varlable costs. and contribution margin for one unlt of each product follow points Selling price Variable expenses $160 270 220 32 148 Direct material: 16 108 8e 98 Other variable expenses Total variable expenses Contribution margin eBook $ 36 $100 40 23% 37% 18% Contribution margin ratio Hint The same raw materlal is used In all three products. Barlow Company has only 6,000 pounds of raw material on hand and will not be able to obtain any more of It for several weeks due to a strike In its supplier's plant. Management is trylng to decide which product(s) to concentrate on next week In filling its backlog of orders. The material costs $8 per pound. Print ReferencesRequired: 1. Calculate th contribution margin per pound of the constraining resource for each product. 2. Assuming that Barlow has unlimited demand for each of Its three products, what is the maximum contribution margin the company can ean when using the 6.000 pounds of raw material on hand? 3. Assuming that Barlow's estimated customer demand is 500 units per product line, what Is the maximum contribution margin the company can earn when using the 6.000 pounds of raw material on hand? 4. A forelgn supplier could furnish Barlow with additional stocks of the raw material at a substantial premlum over the usual price Assuming Barlow's estimated customer demand is 500 units per product line and that the company has used its 6.000 pounds of raw material In an optimal fashion, what is the highest price Barlow Company should be willing to pay for an additional pound of materlals? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required3 Required 4 Calculate the contribution margin per pound of the constraining resource for each product. Contribution margin per pound of the constrained resource Required2>Explanation / Answer
Required - 1
Required - 2
When there is no demand contraint (or) sell what ever is produced is possible, total resouces to be diverted to production of product - A. Because we have highest contribution of 18 per pound of material used. If the total available raw material of 6000 pounds is used for product - A, maximum contribution will be earned = 6000 * 18 = 108000.
Required - 3
Product - A ....... 500 units will be produced by utilizing 500*2 = 1000 pounds. Next we choose - C, ( else product -B can also be choosen). Here C takes 500 Units * 4 pounds = 2000 pounds in total. Now balance remains will be 6000 - 1000 - 2000 = 3000 pounds. Now we start producing product - B, we can produce a maximum of 300 units only. ( i.e ...... 3000 / 10 pounds).
So maximum contribution possible = 500 * 36 + 500 * 40 + 300 * 100 = 68000...........final answer
Required - 4
Shortage of raw material = 200 units of product - B * 10 pounds per unit = 2000 pounds.
For buying these 2000 pounds, we can pay the normal $ 8 per pound + contribution earned per pound
= 8 + 10 = 18.............final answer
A B C Contribution margin ( as given) 36 100 40 Raw material required in pounds 2 10 4 Contribution margin per pound 18 10 10