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Widgeon Co. manufactures three products: Bales, Tales, and Wales. The selling prices are $55, $78, and $32, respectively. The variable costs for each product are $20, $50, and $15, respectively. Each product must go through the same processing in a machine that is limited to 2,000 hours per month. Bales take 5 hours to process; Tales, 7 hours; and Wales 1 hour. What is the contribution margin per machine hour for Tales?

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Answer:

The Contribution Margin Per Machine Hour for Tales is $4 Per Machine hour

Explanation:

First, it is important to find the Contribution margin per unit. The contribution margin per is difference between the sales price per unit less Variable cost per unit.  Secondly, contribution margin per unit divided by the Machine hour use on specific product will gives the Contribution margin per machine hour. The Contribution margin per machine hour for bales $7, tales $4 and Wales is $17.

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