Clay Corporation manufactures two styles of lamps-a Bedford Lamp and a Lowell Lamp.The following per unit data are available: $$\begin{array} { | l | r | r | }
\hline & \text { Bedford Lamp } & \text { Lowell Lamp } \
\hline \text { Sales price } & \$ 27 & \$ 35 \
\hline \text { Variable costs } & \$ 17 & \$ 22 \
\hline \text { Machine hours required for one lamp } & 2 & 4 \
\hline
\end{array}$$ 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 machine hour for the Bedford Lamp? (Round your answer to the nearest cent. )

Question

Clay Corporation manufactures two styles of lamps-a Bedford Lamp and a Lowell Lamp.The following per unit data are available: $$\begin{array} { | l | r | r | } 
\hline & \text { Bedford Lamp } & \text { Lowell Lamp } \
\hline \text { Sales price } & \$ 27 & \$ 35 \
\hline \text { Variable costs } & \$ 17 & \$ 22 \
\hline \text { Machine hours required for one lamp } & 2 & 4 \
\hline
\end{array}$$ 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 machine hour for the Bedford Lamp? (Round your answer to the nearest cent. )

Quizplus · Accepted Answer

Contribution margin per machine hour = (Sales price per unit - Variable cost per unit) / Machine hours required per unit= ($27 - $17) / 2= $5.00 per machine hour

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