Question

rief Exercise 6-11 In Marshall Company, data concerning two products are unit contribution margin—Product A $10, Product B $12; machine hours required for one unit—Product A 2, Product B 3. Compute the contribution margin per unit of limited resource for each product.

Answer 1

Answer: Product A=$5

Product B=$4

Step-by-step explanation:

Product A Product B

Contribution $10 $12

Limiting resource(hour) 2 3

Contribution/resource(contribution/resource) $5 $4

To find the Contribution/resource(contribution/resource) you do: 10/2=5

12/3=4

Answer 2

Product A -$5

Product B-$4

Step-by-step explanation:

Apart from the contribution for products A and B given in the question,the other details are the machine hours required to produce one unit of A and B,which implies that the limited resource is the machine hour provided alongside the contribution

The contribution per unit of limiting factor or resource is computed thus:

Product A Product B

Contribution $10 $12

Limiting resource(hour) 2 3

Contribution/resource(contribution/resource) $5 $4

In other words it would be better to give product preference in production since it has a higher contribution per unit of scarce resource