Cordova manufactures three types of stained glass window, cleverly named Product

Question

Cordova manufactures three types of stained glass window, cleverly named Products A, B, and C. Information about these products follows: Product Sales price Variable costs per unit Fixed costs per unit Required number of labor hours Product A $37.00 19.25 5.00 1.25 B $47.00 21.00 5.00 2.00 Product C $77.00 39.25 5.00 2.50 Cordova currently is limited to 40,000 labor hours per month. Required Assuming an infinite demand for each of Cordova's products, determine contribution margin per direct labor hour. (Round your answers to 2 decimal place.) Contribution Margin Product A Product B Product C CM per DL Hour CM per DL Hour CM per DL Hour Which product would be Cordova's first choice to produce? Product C Product B Product A

Explanation / Answer

Product A Product B Product C Sales price 37 47 77 Variable costs 19.25 21 39.25 Contribution margin per unit 17.75 26 37.75 Direct labor hours 1.25 2 2.5 CM per DL hour 14.2 13 15.1 Product C should be first choice to produce

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