The company can manufacture either two food processors per machine hour or three espresso machines per machine hour. The company's production capacity is 1,200 machine hours per month. What is the contribution margin per machine hour for food processors?

Question

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Tundexi Tundexi · Answer 1 · 2020-08-02T03:18:07+02:00

Answer:

The contribution margin per machine hour is $150.

Explanation:

Note: The missing part of the question is

Food Processor Espresso Machines

Sales price $125 $225

Variable costs $50 $150

Solution

Contribution Margin per Machine = Sales Price - Variable Cost

=$125 - $50

=$75

Contribution Margin = Contribution per Machine × Number of Machines Produced in 1 Machine Hour

= $75 * 2

= $150

Thus, the contribution margin per machine hour for food processors is $150.