Figure 4-2.Pauley Company provides home health care. Pauley charges $35/hour for professional care. Variable costs are $21/hour and fixed costs are $78,000. Next year, Pauley expects to charge out 12,000 hours of home health care.
-Refer to Figure 4-2. What is the contribution margin per hour?

Question

Quizplus · Accepted Answer

The contribution margin per hour is calculated as the difference between the selling price and the variable cost per hour. So, contribution margin per hour = selling price per hour - variable cost per hour = $35 - $21 = $14. Therefore, the best choice is Option C, which is the contribution margin per hour.