Question

Tim’s Manufacturing manufactures and sells sofas and futons. The following data was reported by the managerial accountant. The company can manufacture 2 sofas per machine hour and 1 futon per machine hour. The company’s production capacity is 700 machine hours per month. What is the contribution margin per machine hour for the sofas? Sofas Futons Sales price $750 $525 Variable costs $400 $225

Answer 1

Answer:

Contribution margin for 2 Sofa(per machine hour) = $700

Explanation:

Given:

Sale price of sofa = $750

Sale price of Futon = $525

Variable costs of sofa = $400

Variable costs of Futon = $400

Contribution margin for 2 Sofa(per machine hour):

Sale price of 2 sofa = $750 × 2

Sale price of 2 sofa = $1,500

Variable costs of 2 sofa = $400 × 2

Variable costs of 2 sofa = $800

Contribution margin for 2 Sofa(per machine hour) = Sale price of 2 sofa - Variable costs of 2 sofa

Contribution margin for 2 Sofa(per machine hour) = $1,500 - $800

Contribution margin for 2 Sofa(per machine hour) = $700