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:     

Cordova currently is limited to 60,000 labor hours per month.

Required:
Assuming an infinite demand for each of Cordova’s products, determine each contribution margin per direct labor hour. (Round your answers to 2 decimal place.)



Which product would be Cordova's first choice to produce?

Product A Product B Product C Sales price $ 55.00 $ 65.00 $ 95.00 Variable costs per unit 19.80 10.00 27.40 Fixed costs per unit 5.00 5.00 5.00 Required number of labor hours 2.00 2.50 4.00

Explanation / Answer

Product A Product B Product C Sales price 55 65 95 Variable costs per unit 19.8 10 27.4 Contribution margin per unit 35.2 55 67.6 Required number of labor hours 2 2.5 4 Contribution margin per labor hour 17.6 22 16.9 Preference for production 2 1 3 Product B would be first choice to produce

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