Question

In Crane Company, data concerning two products are unit contribution margin-Product A $28, Product B $39; machine hours required for one unit-Product A 2, Product B 3.

Compute the contribution margin per unit of limited resource for each product. (Round answers to 2 decimal places, e.g. 0.15.)

Answer 1

To compute the contribution margin per unit of limited resource for each product (Product A and Product B), divide the unit contribution margin by the machine hours required for one unit. For Product A, the contribution margin per unit of limited resource is $14.00. For Product B, the contribution margin per unit of limited resource is $13.00.

Step-by-step explanation:

To compute the contribution margin per unit of limited resource for each product (Product A and Product B), you need to divide the unit contribution margin by the machine hours required for one unit.

For Product A, the contribution margin per unit of limited resource is $14.00. (Unit contribution margin $28 divided by 2 machine hours)

For Product B, the contribution margin per unit of limited resource is $13.00. (Unit contribution margin $39 divided by 3 machine hours)