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Mississippi College Operations And Supply Chain Management Assignment Help - Contribution margin

Question - Aon Company produces three products: A, B, and C. The selling price, variable costs, and
contribution margin for one unit of each product follow:

Selling price $120 $180 $130

Variable costs:
Direct materials 71.40 65.40 80.70
Direct labor 10.50 28.00 14.00
manufacturing overhead 2.10 5.60 2.80

Total variable cost 84.00 99.00 97.50

Contribution margin $ 36.00 $ 81.00 $ 32.50

Contribution margin ratio 30% 45 % 25 %

Due to a strike in the plant of one of its competitors, demand for the company's products far exceeds
its capacity to produce. Management is trying to determine which product(s) to concentrate on next
week in filling its backlog of orders. The direct labor rate is $7 per hour, and ...Read More

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