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11 September, 23:26

Sheridan Company's contribution margin is $22.5 per unit for Product A and $40.0 for Product B. Product A requires 2 machine hours and Product B requires 4 machine hours. How much is the contribution margin per unit of limited resource for each product? A B $35.00 $10.00 $11.25 $10.00 $11.25 $7.50 $35.00 $7.50

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  1. 12 September, 02:58
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    The correct answer is $11.25 $10.00.

    Explanation:

    According to the scenario, the given data are as follows:

    Contribution margin for product A = $22.5 per unit

    Product A time required = 2 machine hours

    Contribution margin for product B = $40 per unit

    Product A time required = 4 machine hours

    So, we can calculate the contribution margin per unit by using following formula:

    Contribution margin per unit = Contribution margin for product : Time required

    So, Contribution margin per unit, Product A = $22.5 : 2 = $11.25

    Contribution margin per unit, Product B = $40 : 4 = $10
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