Mama's Favorite Appliances manufactures two products: Food Processors and Espresso Makers. The following data are available: The company can manufacture two food processors per machine hour and three espresso machines per machine hour. The company's production capacity is 1,200 machine hours per month.
What is the contribution margin ratio for food processors?

Question

Mama's Favorite Appliances manufactures two products: Food Processors and Espresso Makers. The following data are available:  The company can manufacture two food processors per machine hour and three espresso machines per machine hour. The company's production capacity is 1,200 machine hours per month.
What is the contribution margin ratio for food processors?

Quizplus · Accepted Answer

To calculate contribution margin ratio, we need the following information:
- Selling price per unit
- Variable cost per unit

We are given the total monthly production capacity, but we need to calculate the production capacity for each product:
- Food Processors: 2 units/machine hour x 1,200 machine hours = 2,400 units
- Espresso Makers: 3 units/machine hour x 1,200 machine hours = 3,600 units

We are not given the selling price or variable cost per unit, so we cannot calculate the contribution margin ratio.

Mama's Favorite Appliances Manufactures Two Products: Food Processors and Espresso