Exhibit 6-6
Sauer Company sells folding chairs for $40.00 per unit.Variable cost is $15.00 per unit.Each chair requires 4 direct labor hours and 2 machine hours to produce.
-Refer to Exhibit 6-6.Which of the following is the correct contribution margin per machine hour?

Question

Quizplus · Accepted Answer

Contribution margin per unit = Selling price - Variable cost 
= $40.00 - $15.00 
= $25.00

Contribution margin per machine hour = Contribution margin per unit ÷ Machine hours per unit 
= $25.00 ÷ 2 
= $12.50

Exhibit 6-6 Sauer Company Sells Folding Chairs for $40.00 Per Unit.Variable Cost