Question

Yong produces silk and polyester fabrics. Management has compiled the following unit selling price and unit cost information for the fabrics: Yong uses the same weaving machine to make both types of fabric. It takes 0.5 hours to make 1 yard of polyester fabric and 0.75 hours to make 1 yard of silk fabric. The machine can be operated a total of 5,000 hours per year. What is the contribution margin per machine hour for silk?

Answer 1

$9.05

Step-by-step explanation:

the information about prices and costs is missing, so I looked it up:

contribution margin per yard for silk = $18 - $4.10 - $2.70 - $3.51 - $0.90 = $6.79

contribution margin per yard for polyester = $10.20 - $0.80 - $2.90 - $3.77 - $0.60 = $2.13

contribution margin per machine hour:

silk = $6.79 x 1/0.75 = $9.05

polyester = $2.13 x 1/0.5 = $4.16