Happy Bauer can produce either 33,000 corncob pipes or 17,000 cornhusk dolls per year. Pipes cost $3.50 to make and sell for $8.50 each, giving a contribution margin of $5 per pipe. Dolls cost $4.50 to make and sell for $11 each, giving a contribution margin of $6.50 per doll. The document calculates the total contribution margin for each product based on the contribution margin per unit and maximum annual production.

1. Happy Bauer has the capacity to produce either 33,000 corncob pipes or 17,000 cornhusk dolls
per year. The pipes cost $3.50 each to produce and sell for $8.50 each. The dolls sell for $11.00
each and cost $4.50 to produce.
A. Calculate the contribution margin per unit for Pipes and Dolls. (Round your answers to 2
decimal places.)
Calculate the total contribution margin for Pipes and Dolls.
Pipes Dolls
Contribution Margin per unit
b.
Calculate the total contribution margin for Pipes and Dolls.
Pipes Dolls
Total contribution margin
Solution
A. Calculate the contribution margin per unit for Pipes and Dolls
Solution-
The per unit contribution margins for the products are shown below:
b. Calculate the total contribution margin for Pipes and Dolls.
Solution-
The total contribution margin for each product is shown below:
Pipes Dolls
Revenue $8.50 $11
Variable costs 3.50 4.50

2. Contribution margin $5.00 $6.50