Adorn Furniture manufactures a small table and a large table.The small table sells for $800,has variable costs of $560 per table,and takes 10 direct labor hours to manufacture.The large table sells for $1620,has variable costs of $980,and takes eight direct labor hours to manufacture.Calculate the contribution margin per direct labor hour for the small table.

Question

Quizplus · Accepted Answer

The contribution margin per unit of a product is calculated by subtracting the variable cost per unit from the selling price per unit.

For the small table:

Contribution Margin = Selling Price - Variable Cost 
Contribution Margin = $800 - $560 
Contribution Margin = $240

Therefore, the contribution margin per unit of the small table is $240.

To calculate the contribution margin per direct labor hour, we need to divide the contribution margin per unit by the direct labor hours per unit.

Contribution Margin per Direct Labor Hour = Contribution Margin per Unit / Direct Labor Hours per Unit

Contribution Margin per Direct Labor Hour = $240 / 10 
Contribution Margin per Direct Labor Hour = $24

Therefore, the contribution margin per direct labor hour for the small table is $24.

The correct answer is C.

Adorn Furniture Manufactures a Small Table and a Large Table