Custom Furniture manufactures a small table and a large table.The small table sells for $900,has variable costs of $580 per table and takes 10 direct labour hours to manufacture.The large table sells for $1500,has variable costs of $980 and takes eight direct labour hours to manufacture.Calculate the contribution margin per direct labour hour for the small table.

Question

Quizplus · Accepted Answer

Contribution margin per direct labour hour can be calculated by dividing the contribution margin by the number of direct labour hours.

Contribution margin for the small table = Selling price - Variable costs 
= $900 - $580 
= $320

Contribution margin per direct labour hour = (Contribution margin / Direct labour hours) 
= ($320 / 10) 
= $32

Therefore, the contribution margin per direct labour hour for the small table is $32. Hence, the best choice is B.

Custom Furniture Manufactures a Small Table and a Large Table