From the information below,determine the contribution margin per unit of limiting factor (labour hours).
$\begin{array}{|l|r|}
\hline \text {Selling price per unit} & \$ 150 \
\hline \text {Variable costs per unit }& \$ 120 \
\hline\text { Labour hours per unit }&\text { 3 hours} \
\hline
\end{array}$
A) $3
B) $40
C) $10
D) $30

Question

From the information below,determine the contribution margin per unit of limiting factor (labour hours).
$\begin{array}{|l|r|}
\hline \text {Selling price per unit} &  \$ 150  \
\hline \text {Variable costs per unit }&  \$ 120  \
\hline\text { Labour hours per unit }&\text { 3 hours} \
\hline
\end{array}$
A) $3
B) $40
C) $10
D) $30

Quizplus · Accepted Answer

To determine the contribution margin per unit of limiting factor (labor hours), we need to calculate the contribution margin per unit and then divide it by the labor hours per unit. 
Contribution margin per unit = Selling price per unit - variable cost per unit 
Given information: 
Selling price per unit = $60 
Variable cost per unit: 
Direct material = $20 
Direct labor = $10 
Variable manufacturing overhead = $5 
Total variable cost per unit = $35 
Contribution margin per unit = $60 - $35 = $25 
Labor hours per unit = 1 
Contribution margin per unit of limiting factor (labor hours) = $25/1 = $25 
Therefore, none of the given choices is correct as the contribution margin per unit of limiting factor is $25, which is not matching with any of the given options.

From the Information Below,determine the Contribution Margin Per Unit of Limiting