Question

Sheridan Company’s contribution margin is $22.5 per unit for Product A and $40.0 for Product B. Product A requires 2 machine hours and Product B requires 4 machine hours. How much is the contribution margin per unit of limited resource for each product? A B $35.00 $10.00 $11.25 $10.00 $11.25 $7.50 $35.00 $7.50

Answer 1

The correct answer is $11.25 $10.00.

Step-by-step explanation:

According to the scenario, the given data are as follows:

Contribution margin for product A = $22.5 per unit

Product A time required = 2 machine hours

Contribution margin for product B = $40 per unit

Product A time required = 4 machine hours

So, we can calculate the contribution margin per unit by using following formula:

Contribution margin per unit = Contribution margin for product ÷ Time required

So, Contribution margin per unit, Product A = $22.5 ÷ 2 = $11.25

Contribution margin per unit, Product B = $40 ÷ 4 = $10