Barlow Company manufactures three products: A, B, and C. The selling price, variable costs, and contribution margin for one unit of each product follow:
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Product
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A
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B
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C
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|
Selling price
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$
|
240
|
|
|
$
|
360
|
|
|
$
|
320
|
|
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|
|
|
|
|
|
|
|
|
|
|
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Variable expenses:
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|
|
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|
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|
|
|
|
|
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Direct materials
|
|
24
|
|
|
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72
|
|
|
|
32
|
|
|
Other variable expenses
|
|
120
|
|
|
|
108
|
|
|
|
176
|
|
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|
|
|
|
|
|
|
|
|
|
|
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Total variable expenses
|
|
144
|
|
|
|
180
|
|
|
|
208
|
|
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|
|
|
|
|
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|
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|
|
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Contribution margin
|
$
|
96
|
|
|
$
|
180
|
|
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$
|
112
|
|
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|
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|
|
|
|
|
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Contribution margin ratio
|
|
40
|
%
|
|
|
50
|
%
|
|
|
35
|
%
|
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The same raw material is used in all three products. Barlow Company has only 4,400 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 trying to decide which product(s) to concentrate on next week in filling its backlog of orders. The material costs $8 per pound.
Required: 1a - Compute the amount of contribution margin that
