Solution-Compute the amount of materials each product used

Compute the amount of materials each product used

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Reference no: EM132968117

PROBLEM - Barter Company manufactures three products: Alpha, Beta, and Charlie. The selling price, variable costs, and contribution margin for one unit of each product follow:

Alpha Beta Charlie

Selling price P180 P270 P240

Less variable expenses

Direct materials 24 72 32

Other variable expenses 102 90 148

Total variable expenses 126 162 180

Contribution margin P 54 P108 P 60

Contribution margin ratio 30% 40% 25%

Product demand in units 1,000 800 600

Sales mix 2 1 1

The same raw material is used in all three products. Barter Company has only 5,000 pounds of material on hand and will not be able to obtain any more material 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 P8 per pound.

Required -

1. Compute the amount of materials each product used.

2. How many units of Charlie should be produced?

3. What is the breakeven point in peso if total fixed costs amount to P345,000?

4. How many materials should Barter acquire to breakeven?

Reference no: EM132968117

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Compute the amount of materials each product used

Reference no: EM132968117

Reference no: EM132968117

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