Kitchen Convenience Company manufactures two products-toaster ovens and bread machines.The following data are available: $$\begin{array} { | l | r | r | }
\hline & \text { Toaster Ovens } & \text { Bread Machines } \
\hline \text { Sales price } & \$ 100 & \$ 150 \
\hline \text { Variable costs } & \$ 40 & \$ 70 \
\hline
\end{array}$$ Kitchen Convenience can manufacture six toaster ovens per machine hour and four bread machines per machine hour.Kitchen Convenience's production capacity is 1600 machine hours per month.What is the contribution margin per machine hour for bread machines?

Question

Kitchen Convenience Company manufactures two products-toaster ovens and bread machines.The following data are available: $$\begin{array} { | l | r | r | } 
\hline & \text { Toaster Ovens } & \text { Bread Machines } \
\hline \text { Sales price } & \$ 100 & \$ 150 \
\hline \text { Variable costs } & \$ 40 & \$ 70 \
\hline
\end{array}$$ Kitchen Convenience can manufacture six toaster ovens per machine hour and four bread machines per machine hour.Kitchen Convenience's production capacity is 1600 machine hours per month.What is the contribution margin per machine hour for bread machines?

Quizplus · Accepted Answer

The contribution margin per unit for bread machines is calculated as sales price minus variable costs, which is $150 - $70 = $80. Since four bread machines can be manufactured per machine hour, the contribution margin per machine hour for bread machines is $80 * 4 = $320.

Kitchen Convenience Company Manufactures Two Products-Toaster Ovens and Bread Machines