Brittany Furniture manufactures two products: Couches and Beds. The following data are available: Couches Beds Sales price $700.00 $900.00 Variable costs $350.00 $400.00 The company can manufacture two couches per machine hour and one bed per machine hour. The company's production capacity is 900 machine hours per month. What is the contribution margin per machine hour for couches based on the company's product mix?

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Business

Kaitlin Roth

3 May, 14:39

Brittany Furniture manufactures two products: Couches and Beds. The following data are available: Couches Beds Sales price $700.00 $900.00 Variable costs $350.00 $400.00 The company can manufacture two couches per machine hour and one bed per machine hour. The company's production capacity is 900 machine hours per month. What is the contribution margin per machine hour for couches based on the company's product mix?

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Jaslyn Glass · Answer 1

Contribution margin for couches is $700 per machine hour

Explanation:

Contribution = Sales Price - Variable Cost

Contribution per unit of Couches = $700 - $350 = $350

Total units in one hour = 2

Contribution per unit of Bed = $900 - $400 = $500

Total units in one hour = 1

Contribution per machine hour for couches = Contribution per unit of couches X number of units in one hour = $350 X 2 = $700 per machine hour.

Contribution margin for couches is $700 per machine hour.