Homework Answers
Option (c) is correct.
Contribution margin = Selling price per unit - Variable cost per unit
Contribution margin = $40 -$15 = $25
Now, here the limiting factor is machine time, so we have to calculate the contribution margin per machine time.
Contribution margin per machine time = Contribution margin / machine time
where, machine time = 1/2 = 0.5
Contribution margin per machine time = $25 / 0.5 = $50
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