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Clay Corporation Manufactures Two Styles of Lamps-A Bedford Lamp and a Lowell

Question 119

Multiple Choice

Clay Corporation manufactures two styles of lamps-a Bedford Lamp and a Lowell Lamp. The following per unit data are available:
 Bedford Lamp  Lowell Lamp  Sale price $25$35 Variable costs $17$23 Machine hours required for 1 lamp 24\begin{array}{|l|r|r|}\hline&\text { Bedford Lamp } &\text { Lowell Lamp }\\\hline \text { Sale price } & \$ 25 & \$ 35 \\\hline \text { Variable costs } & \$ 17 & \$ 23 \\\hline \text { Machine hours required for 1 lamp } & 2 & 4 \\\hline\end{array}


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Total fixed costs are $30,000, and Clay can sell a maximum of 10,000 units of each style of lamp annually. Machine hour capacity is 25,000 hours per year. What is the contribution margin per unit for the Lowell lamp?


A) $4 per machine hour
B) $2 per machine hour
C) $3 per machine hour
D) $12 per machine hour

Correct Answer:

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