Cozy Cat Furniture manufactures two products: cat trees and cat condos.The following data are available: $$\begin{array} { | l | r | r | }
\hline & \text { Cat Tree } & \text { Cat Conda } \
\hline \text { Sales price } & \$ 80.00 & \$ 150.00 \
\hline \text { Variable costs } & \$ 42.00 & \$ 120.00 \
\hline
\end{array}$$ The company can manufacture two cat trees per machine hour and one cat condos per machine hour.The company's production capacity is 900 machine hours per month.
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What is the contribution margin ratio for cat trees?

Question

Cozy Cat Furniture manufactures two products: cat trees and cat condos.The following data are available: $$\begin{array} { | l | r | r | } 
\hline & \text { Cat Tree } & \text { Cat Conda } \
\hline \text { Sales price } & \$ 80.00 & \$ 150.00 \
\hline \text { Variable costs } & \$ 42.00 & \$ 120.00 \
\hline
\end{array}$$ The company can manufacture two cat trees per machine hour and one cat condos per machine hour.The company's production capacity is 900 machine hours per month.
-
What is the contribution margin ratio for cat trees?

Quizplus · Accepted Answer

The contribution margin for cat trees is calculated as (Sales price - Variable costs) / Sales price = ($80 - $42) / $80 = $38 / $80 = 47.5%.

Cozy Cat Furniture Manufactures Two Products: Cat Trees and Cat