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# Unit contribution margin, contribution per labor-hour

Comfy Fit Company makes three sizes of shirts, small, medium and large, on one assembly line that has a limit of 600 labor-hours per week. Comfy Fit Company can seel all the shirts it can make under current operating capacity. Manufacturing information per shirt for each product is as follows:

Small Medium Large
Selling price \$8 \$12 \$15
Variable costs 5 6 10
Labor hours per shirt 0.3 0.5 1.0

Requirements:

Determine the weekly contribution margin when all labor-hours are allotted to the product with the highest:

a. unit selling price.

b. unit contribution margin

c. contribution per labor-hour

#### Solution Preview

Selling price Variable cost Unit Contribution Labour hrs per shirt Contribution per labor hr
Small \$8 \$5 \$3 =8 - 5 0.3 \$10.00 =3/0.3
Medium \$12 \$6 \$6 =12 - 6 0.5 \$12.00 =6/0.5
Large \$15 \$10 \$5 =15 - 10 1 \$5.00 =5/1

Requirements:

Determine the weekly contribution margin when all labor-hours are allotted to the product with the highest:

a. unit selling price.

Large has the highest unit selling price at \$15

Contribution per labor ...

#### Solution Summary

Determines the weekly contribution margin when all labor-hours are allotted to the product with the highest: unit selling price, unit contribution margin and contribution per labor-hour

\$2.19