Aurum Appliances manufactures three sizes of kitchen appliances: small, medium, and large. Product information is provided below.                                                                           Small   Medium         Large         Unit selling price                                          $400    $600           $1,200         Unit costs:                 Variable manufacturing                        (220)    (280)            (500)                 Fixed manufacturing                            (80)       (130)            (

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Aurum Appliances manufactures three sizes of kitchen appliances: small, medium, and large. Product information is provided below.

                                                                          Small   Medium         Large

        Unit selling price                                          $400    $600           $1,200

        Unit costs:

                Variable manufacturing                        (220)    (280)            (500)

                Fixed manufacturing                            (80)       (130)            (240)

                Fixed selling and administrative          (60)          (75)              (120)

        Unit profit                                                    $ 40       $ 115              $340

 

        Demand in units                                          100          120                 100

        Machine-hours per unit                                20            40                 100

 

The maximum machine-hours available are 6,000 per week.

What is the contribution margin per machine-hour for a medium appliance?

Select one:

a. $6.13
b. $1.15
c. $2.34
d. $4.90
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