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    Unit contribution margin, contribution per labor-hour

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    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

    © BrainMass Inc. brainmass.com June 3, 2020, 6:46 pm ad1c9bdddf
    https://brainmass.com/business/labour-management-and-relations/unit-contribution-margin-contribution-per-labor-hour-74442

    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

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