2033-035-Micrex Ch 7 HW Condova manufactures three types of stained glass window

Question

2033-035-Micrex Ch 7 HW Condova manufactures three types of stained glass window, dlevarly named Products A B, and C. Information about these products follows Sales price Variable costs per unit 47.00 $77.00 1925 costs per 5.00 Required number of labor hours 1.25 2.00 Cordova currently is limited to 40,000 labor hours per month Assuming an infrnite demand for each of Cordova's products, detemine contribution margin per direct labor hour (Round your answers to 2 decimal place.) Product A CM per DL Hour Product rCLur CM per DL Hour Which product would be Cordova's first choioe to produce? Product B O Product c Product A Hints References eBook & Resources Hint# 2 3 0

Explanation / Answer

Contribution margin = Sales price - Variable costs

Contribution margin per Direct labour hour = Contribution margin / Required number of direct labour hours

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Product C (as it has highest contribution margin per direct labour hour)

Contribution Margin Product A 17.75 (37-19.25) 14.2 (17.75/1.25) Product B 26 (47-21) 13 (26/2) Product C 37.75 (77-39.25) 15.1 (37.75/2.5)

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