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Solve the following problem:

Incorporation produces three products: Product A, Product B, and Product C. Product A requires 8 labor hours per unit to be completed. The company's labor hours are limited to 60,000 hours. The information related to these products is as follows:

\begin{tabular}{|l|c|c|c|}
\hline
Particulars & Product A & Product B & Product C \\
\hline
Selling Price per unit & \[tex]$ 1,400 & \$[/tex] 1,800 & \[tex]$ 1,500 \\
\hline
Variable cost per unit & \$[/tex] 800 & \[tex]$ 1,200 & \$[/tex] 1,000 \\
\hline
\end{tabular}

Calculate the contribution margin per unit of constrained labor hours for Product B.



Answer :

GinnyAnswer
To calculate the contribution margin per unit of constrained resource (labor hours) for Product B, follow these steps:

1. Identify the selling price per unit for Product B:
- Selling Price per unit for Product B: \[tex]$1,800 2. Identify the variable cost per unit for Product B: - Variable Cost per unit for Product B: \$[/tex]1,200

3. Calculate the contribution margin per unit for Product B:
- Contribution Margin = Selling Price per unit - Variable Cost per unit
- Contribution Margin = \[tex]$1,800 - \$[/tex]1,200
- Contribution Margin = \[tex]$600 4. Determine the number of labor hours required per unit for Product B: - Labor hours per unit for Product B: 6 hours 5. Calculate the contribution margin per hour for Product B: - Contribution Margin per Hour = Contribution Margin per unit / Labor hours per unit - Contribution Margin per Hour = \$[/tex]600 / 6 hours
- Contribution Margin per Hour = \[tex]$100.0 Therefore, the contribution margin per unit of constrained resource (labor hours) for Product B is \$[/tex]100.0 per hour.

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