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Cordova manufactures three types of stained glass window, cleverly named Products A, B, and
C. Information about these products follows: Cordova currently is limited to 60,000 labor hours
per month. Required: Assuming an infinite demand for each of Cordova?s products, determine
contribution margin per direct labor hour. (Round your answers to 2 decimal place.) Which
product would be Cordova?s first choice to produce? Product B Product C ProductA
Solution
- Contribution of Product A = 52.00 - 17.60 = $34.40 per unit
Contribution of Product B = 62.00 - 10.75 = $51.25 per unit
Contribution of Product C = 92.00 - 25.60 = $66.40 per unit
- Contribution Margin per Direct Labour Hour of Product A = 34.40 / 2.00 = $17.20 per Direct
Labour Hour
Contribution Margin per Direct Labour Hour of Product B = 51.25 / 2.50 = $20.50 per Direct
Labour Hour
Contribution Margin per Direct Labour Hour of Product C = 66.40 / 4.00 = $16.60 per Direct
Labour Hour
- First preference of Cordova would be Product B since it has Highest Contribution per Direct
Labour Hour of $20.50

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Cordova manufactures three types of stained glass window- cleverly nam.docx

  • 1. Cordova manufactures three types of stained glass window, cleverly named Products A, B, and C. Information about these products follows: Cordova currently is limited to 60,000 labor hours per month. Required: Assuming an infinite demand for each of Cordova?s products, determine contribution margin per direct labor hour. (Round your answers to 2 decimal place.) Which product would be Cordova?s first choice to produce? Product B Product C ProductA Solution - Contribution of Product A = 52.00 - 17.60 = $34.40 per unit Contribution of Product B = 62.00 - 10.75 = $51.25 per unit Contribution of Product C = 92.00 - 25.60 = $66.40 per unit - Contribution Margin per Direct Labour Hour of Product A = 34.40 / 2.00 = $17.20 per Direct Labour Hour Contribution Margin per Direct Labour Hour of Product B = 51.25 / 2.50 = $20.50 per Direct Labour Hour Contribution Margin per Direct Labour Hour of Product C = 66.40 / 4.00 = $16.60 per Direct Labour Hour - First preference of Cordova would be Product B since it has Highest Contribution per Direct Labour Hour of $20.50