Final Exam chapters / -10 29 Time remaining: 02 31 # 10 of 36 # Unanswered: Narl
ID: 2562736 • Letter: F
Question
Final Exam chapters / -10 29 Time remaining: 02 31 # 10 of 36 # Unanswered: Narly Skate boards manufactures three different product lines Base, Long, and Trick Considerable market demand exists for all models. The following per unit data apply Base Model Long Model Trick Model $100 $120 $140 12 48 16 20 12 24 Direct materials Direct labor (512 per hour) Variable support costs ($4 per machine-hour) Fixed support costs 12 24 16 20 20 Which model has the greatest contribution margin per machine-hour? A base model long model trick model D both the long model and the trick model Previous Bookmark Next Summar Submit
Explanation / Answer
Answer:
A) Base model has greatest contribution margin per Machine Hour
Working notes for the above answer
Base
Model
Long
Model
Trick
Model
Selling price
100
120
140
Less
Variable cost *
44
52
76
Contribution margin per unit
56
68
64
Divided by total machine hour required**
2
4
4
Contribution margin per hour
28
17
16
*
Base
Model
Long
Model
Trick
Model
DM
12
12
12
DL
24
24
48
Variable support Cost
8
16
16
Total Variable cost
44
52
76
**
Base
Model
Long
Model
Trick
Model
Variable support Cost
8
16
16
Divided by $4 per hour
4
4
4
machine hour required
2
4
4
So we can say that out of three model base Model has greatest contribution margin per machine Hour that is $28 per machine hour
Base
Model
Long
Model
Trick
Model
Selling price
100
120
140
Less
Variable cost *
44
52
76
Contribution margin per unit
56
68
64
Divided by total machine hour required**
2
4
4
Contribution margin per hour
28
17
16
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