Respuesta :
The total contribution margin per machine hour = $20 , the total contribution margin of product is $7000.
Contribution margin :
Contribution margin shows the total amount of revenue after covering fixed costs and deducting variable costs to make the business profitable," says Knight. This can be thought of as a portion of sales that helps offset fixed costs. Contribution margin (CM) or dollar contribution per unit is the selling price per unit minus the variable cost per unit. "Contribution" represents the portion of sales that is not consumed by variable costs and contributes to covering fixed costs.
1.
Product contribution margin Standard Deluxe
Contribution margin per unit $50 $40
Machine hours per unit 1 2
Contribution margin per machine hour $50 $20
2.
Standard Deluxe Total
Hours dedicated to the production of each product 600 (600*1) 400 (200*2) 1,000
Units produced for most profitable sales mix 140 0
Contribution margin per unit $50 $40
Total contribution margin $7,000 $0 $7,000
3.
Standard Deluxe Total
Hours dedicated to the production of each product 70 (70*1) 400 (200*2) 470
Units produced for most profitable sales mix 70 70
Contribution margin per unit $50 $40
Total contribution margin $3,500 $2,800 $6,300
Why is Contribution Margin Important?
It is an accounting term that helps business owners and managers track the profitability of their products. Understanding contribution margin is important. Because the contribution margin shows how much of the product's sales cover the fixed costs and contribute to the company's profit.
Learn more about Contribution Margin :
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