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What is the contribution margin per machine hour

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Reference no: EM132533522

Question - The following data relates to Smash Company in questions 8-10:

Smash Company makes two types of tennis rackets with the following data:

Pro Racket

Unit sales price $400

Unit variable costs $100

Annual demand 2,000 units

Machine hours 1.5 MH per unit

Basic Racket

Unit sales price $100

Unit variable costs $70

Annual demand 5,000 units

Machine hours 2 MH per unit

1. What is the contribution margin per machine hour for one Pro racquet?

A) $300

B) $200

C) $30

D) $15

2. What is the contribution margin per machine hour for one Basic racquet?

A) $300

B) $200

C) $30

D) $15

3. Smash Company has 4,000 machine hours available annually to manufacture tennis racquets. If the firm makes 2,000 Pro rackets to meet demand, how many Basic rackets will the firm be able to make during the year?

A) 1,500 Basic rackets

B) 500 Basic rackets

C) 5,000 Basic rackets

D) No Basic rackets

Reference no: EM132533522

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