Question

Daffodil Incorporated manufactures two types of vases, small and large. The following per unit data are available: Small Vase Large Vase Sales price $60 $100 Variable costs $35 $60 Machine hours required for 1 vase 1 2 Total fixed costs are $600,000 and Daffodil Incorporated can sell a maximum of 25,000 units of each type of vase annually. Machine hour capacity is 50,000 hours per year. Complete the following, showing your work for credit: Determine the contribution margin per unit for each type of vase.

Answer 1

Answer:

Instructions are below.

Explanation:

Giving the following information:

Small Vase:

Sales price= $60

Variable costs= $35

Large Vase

Sales price= $100

Variable costs= $60

The contribution margin per unit is calculated by deducting from the selling price the unitary variable cost.

Small Vase:

Contribution margin= 60 - 35= $25

Large Vase:

Contribution margin= 100 - 60= $40