Final answer:
The Glide model's contribution margin per direct labor hour is $104, while the Ultra model's is $79 per direct labor hour.
Step-by-step explanation:
The computation of the contribution margin per direct labor hour is a crucial financial analysis for Surf Company, enabling it to evaluate the profitability of each surfboard model relative to the labor required for production. The contribution margin represents the amount available to cover fixed costs and contribute to profit after covering variable costs.
For the Glide model, which has a contribution margin of $208 and requires 2 direct labor hours per unit, the contribution margin per direct labor hour is calculated as follows:
\[ \text{Contribution Margin per Direct Labor Hour (Glide)} = \frac{\text{Contribution Margin (Glide)}}{\text{Direct Labor Hours (Glide)}} = \frac{\$208}{2 \text{ hours}} = \$104 \text{ per direct labor hour} \]
Similarly, for the Ultra model with a contribution margin of $316 and requiring 4 direct labor hours per unit, the contribution margin per direct labor hour is calculated as:
\[ \text{Contribution Margin per Direct Labor Hour (Ultra)} = \frac{\text{Contribution Margin (Ultra)}}{\text{Direct Labor Hours (Ultra)}} = \frac{\$316}{4 \text{ hours}} = \$79 \text{ per direct labor hour} \]
These calculations provide a clear comparison of the profitability of each surfboard model concerning the labor hours invested. Surf Company can use this information to make informed decisions on resource allocation, especially when faced with limited labor hours. By understanding the contribution margin per direct labor hour, the company can optimize its production strategy, focusing on the models that yield higher profitability relative to the labor input, ultimately enhancing overall financial performance.