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13 August, 12:21

Assume the following information for Jones Company:

Deluxe Chair:

Contribution margin per chair $90

Machine hours to produce 1 chair 3 hours

Executive Chair:

Contribution margin per chair $100

Machine hours to produce 1 chair 5 hours

Machine hours is the constraint resource.

The contribution margin per machine hour is:

+1
Answers (1)
  1. 13 August, 13:04
    0
    For deluxe chair contribution margin per machine hour is $ 30

    For Executive Chair contribution margin per machine hour is $ 20

    Explanation:

    Given:

    For the Deluxe Chair,

    The contribution margin per chair = $ 90

    Machine hours required to produce 1 chair = 3 hours

    Therefore,

    the contribution margin per machine hour

    = (contribution margin per chair / Machine hours required per char)

    or

    = $ 90 / 3 = $ 30

    Now, for the Executive Chair,

    Contribution margin per chair = $ 100

    Machine hours to produce 1 chair = 5 hours

    Therefore,

    the contribution margin per machine hour

    = (contribution margin per chair / Machine hours required per char)

    or

    = $ 100 / 5 = $ 20
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