Kitchen Appliances Company manufactures two products: toaster ovens and bread machines.The following data are available: $$\begin{array} { | l | r | r | }
\hline & \text { Toaster Ovens } & \text { Bread Machines } \
\hline \text { Sales price } & \$ 100 & \$ 200 \
\hline \text { Variable costs } & \$ 30 & \$ 150 \
\hline
\end{array}$$ The company can manufacture three toaster ovens per machine hour and two bread machines per machine hour.The company's production capacity is 1,200 machine hours per month.
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What is the contribution margin per machine hour for toaster ovens?

Question

Kitchen Appliances Company manufactures two products: toaster ovens and bread machines.The following data are available: $$\begin{array} { | l | r | r | } 
\hline & \text { Toaster Ovens } & \text { Bread Machines } \
\hline \text { Sales price } & \$ 100 & \$ 200 \
\hline \text { Variable costs } & \$ 30 & \$ 150 \
\hline
\end{array}$$ The company can manufacture three toaster ovens per machine hour and two bread machines per machine hour.The company's production capacity is 1,200 machine hours per month.
- 
What is the contribution margin per machine hour for toaster ovens?

Quizplus · Accepted Answer

Contribution margin per machine hour for toaster ovens = (Sales price per unit - Variable cost per unit) * Number of units produced per machine hour= ($100 - $30) * 3= $210

Kitchen Appliances Company Manufactures Two Products: Toaster Ovens and Bread