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Calculate the unit contribution margin per production

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Reference no: EM132666885

Problem (1.) When a production constraint exists, the best measure of profitability is the:

a. differential revenue per production constraint.

b. unit contribution margin per production constraint.

c. markup per production constraint.

d. differential cost per production constraint.

Problem (2.) Zionade Company manufactures a certain type of alloy. The alloy undergoes a hardening process. The hardening unit is operating at full capacity and is a production constraint. The unit contribution margin and the number of hours of hardening treatment used by the alloy are as follows:

Unit selling price$97.50

Unit variable cost(22.50)

Unit contribution margin$75.00

Hardening treatment hours per unit3 hrs.

Assuming Zionade produces 2,000 units of the alloy, calculate the unit contribution margin per production constraint hour.

a. $75 per hour

b. $33 per hour

c. $25 per hour

d. $98 per hour

Reference no: EM132666885

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