Question

Childress compnay produces three products, K1, S5, and G9. Each product uses the same type of material. K1 uses 4.5 pounds of the material, S5 uses 3 pounds , and G9 uses 5.5 pounds. Demand for all products is strong but only 59900 pounds of material are available. Information about the selling price per unit and variable cost per unit of each product follows.

K1 S5 G9
Selling price $158.38 $114.80 $204.52
Variable costs 86.00 91.00 139.00

Required:
Calculate the contribution margin per pound for each of the three products.

Answer 1

Product K1 S5 G9

$ $ $

Contribution per pound 16.08 7.93 11.91

Step-by-step explanation:

Contribution per pound is equate to contribution per unit divided quantity of material required per unit of product.

Contribution per pound = Contribution per unit/quantity of material

Contribution per unit =selling price - variable cost per unit

Product K1 S5 G9

$ $ $

Selling price 158.38 114.80 204.52

Variable cost (86.00) (91.00) (139.00)

Contribution per unit 72.38 23.8 65.52

Material per unit (pounds) 4.5 3 5.5

Contribution per pound 16.08 7.93 11.91