Edison Company produces two types of piano legs, plain and fancy, which have unit contribution margins of $8 and $12, respectively. Each piano leg must spend time on a special machine. The firm owns four machines that together provide 10,000 hours of machine time per year. The plain leg requires 0.25 hours of machine time, and the fancy leg requires 0.5 hours of machine time.
-Refer to the Figure.What is the contribution margin per hour of machine time for a fancy leg?
A)$6
B)$8
C)$12
D)$24

Question

Quizplus · Accepted Answer

The contribution margin per hour of machine time for a fancy leg is calculated by dividing the unit contribution margin by the hours of machine time required. For a fancy leg, this is $12 / 0.5 hours = $24 per hour.

Edison Company Produces Two Types of Piano Legs, Plain and Fancy