Solution-Calculate the contribution margin per direct

Calculate the contribution margin per direct labour hour

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Reference no: EM132569207

Question - Minnie Manufacturing Limited

Minnie Manufacturing Limited produces 3 products: Product April, Product May and Product June. The company has an annual capacity of 4,160 hours of direct labour. The direct labour rate is $15/hour. Information on the products is as follows:

	Product April	Product May	Product June
Selling price per unit	$70	$60	$75
Variable expenses per unit
Direct materials	20	25	30
Direct labour	24	12	18
Variable overhead	10	8	9
Contribution margin	16	15	18
Current yearly demand	1,000 units	2,000 units	1,000 units

Required -

a) Calculate the contribution margin per direct labour hour.

b) Which product would you recommend the company produce first and why?

c) What would be the total contribution margin for the company if they filled the demand for Product May first, then Product June and used the remaining hours to fill as many orders of Product April as they could. Show your work.

Reference no: EM132569207

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Calculate the contribution margin per direct labour hour

Reference no: EM132569207

Reference no: EM132569207

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