The contribution margin per machine hour for a given product is calculated as:
A) Full cost per unit/number of machine-hours per unit for the product in question.
B) Number of machine-hours per unit for the product in question/full-cost per unit of the product.
C) Selling price per unit less variable manufacturing cost per unit for the product in question.
D) Selling price per unit for the product less the product's variable manufacturing cost per unit less the variable selling cost per unit for the product.
E) Selling price per unit less total variable cost per unit, divided by number of machine-hours per unit.

Question

Quizplus · Accepted Answer

The contribution margin per machine hour is calculated by subtracting the total variable cost per unit from the selling price per unit, and then dividing the result by the number of machine-hours required per unit. This measures how much each machine hour contributes to covering fixed costs and generating profit.

The Contribution Margin Per Machine Hour for a Given Product