Van Horn, Inc. has been producing and selling 20,000 meters a year. The company has the capacity to produce 25,000 meters with its present facilities. The following information is also available:

-Currently, the contribution approach cost of manufacturing one meter is

Question

Van Horn, Inc. has been producing and selling 20,000 meters a year. The company has the capacity to produce 25,000 meters with its present facilities. The following information is also available:
 
-Currently, the contribution approach cost of manufacturing one meter is

Quizplus · Accepted Answer

To find the contribution approach cost of manufacturing one meter, we can use the following formula:

Contribution approach = selling price - variable costs

From the information provided, we know that the selling price is $400 per meter. We also know the variable costs:

- Direct materials: $80 per meter
- Direct labor: $120 per meter
- Variable overhead: $40 per meter

Adding these variable costs gives us a total of $240 per meter.

Subtracting the variable costs from the selling price gives us the contribution approach:

Contribution approach = $400 - $240
Contribution approach = $160

Therefore, the answer is B) $160.