Easy Cook Company manufactures two products: toaster ovens and bread machines. The following data are available:
$$\begin{array} { | l | r | r | }
\hline & \text { Toastar Ovens } & \text { Bread Machines } \
\hline \text { Sale price } & \$ 60 & \$ 135 \
\hline \text { Variable costs } & \$ 38 & \$ 62 \
\hline
\end{array}$$
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Easy Cook can manufacture five toaster ovens per machine hour and three bread machines per machine hour. Easy Cook's production capacity is 1,500 machine hours per month. What is the contribution margin per machine hour for toaster ovens?

Question

Easy Cook Company manufactures two products: toaster ovens and bread machines. The following data are available:
$$\begin{array} { | l | r | r | } 
\hline & \text { Toastar Ovens } & \text { Bread Machines } \
\hline \text { Sale price } & \$ 60 & \$ 135 \
\hline \text { Variable costs } & \$ 38 & \$ 62 \
\hline
\end{array}$$
-
Easy Cook can manufacture five toaster ovens per machine hour and three bread machines per machine hour. Easy Cook's production capacity is 1,500 machine hours per month. What is the contribution margin per machine hour for toaster ovens?

Quizplus · Accepted Answer

The contribution margin per machine hour for toaster ovens is $110. This is calculated as follows:Contribution margin per unit = Sale price - Variable costsContribution margin per unit for toaster ovens = $60 - $38 = $22Contribution margin per machine hour = Contribution margin per unit * Number of units produced per machine hourContribution margin per machine hour for toaster ovens = $22 * 5 = $110

Easy Cook Company Manufactures Two Products: Toaster Ovens and Bread