Question

ampara Corporation manufactures two styles of lamps long dash Bedford Lamp and Lowell Lamp. The following per unit data are​ available: Bedford Lamp Lowell Lamp Sales price $ 28 $ 38 Variable costs $ 18 $ 22 Machine hours required for one lamp 1 4 Total fixed costs are $ 30 comma 000​, and Lampara can sell a maximum of 12 comma 000 units of each style of lamp annually. Machine hour capacity is 25 comma 000 hours per year. What is the contribution margin per machine hour for the Lowell​ Lamp

Answer 1

Answer:

The $ 4 per machine hour is the contribution margin per machine hour for the Lowell​ Lamp.

Explanation:

Since in the question two lamps : Bed-ford lamp and Lowell lamp information is given .

Based on the information mentioned in the question, First we have to calculate the contribution margin per unit. Than we are able to calculate contribution margin per hour.

The computation for Lowell Lamp is given below

The contribution margin per unit = Sales per unit - variable cost per unit

                                                      = $38 - $22

                                                      = $16 per unit

Since, contribution margin per unit is  $16 per unit. So, now we calculate contribution margin per machine hour  which is equals to

Contribution margin ÷ machine hours for Lowell lamp

$16 per unit ÷ 4

= $ 4 per machine hour

Thus, the $ 4 per machine hour is the contribution margin per machine hour for the Lowell​ Lamp.