Needle Is a Private Laboratory That Performs More Than 100

question 33

Multiple Choice

Needle is a private laboratory that performs more than 100 different tests and analyses. Four tests require the use of a radiological counting machine that can supply 6,000 hours per year. Information on the four lab tests are as follows:
$\begin{array}{lrrrr} & \text { Test A } & \text { Test B } & \text { Test C } & \text { Test D } \\\text { Charging rate } & \$ 50 & \$ 20 & \$ 80 & \$ 70 \\\text { Variable cost } & 10 & 10 & 60 & 30 \\\text { Machine hours } & 2 & 1 & 0.5 & 0.25\end{array}$
-Refer to the Figure.What is the contribution margin per hour of machine time for Test A?

• A)$10
• B)$20
• C)$40
• D)$100

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Definitions:

Adjusting Entry

Journal entries made at the end of an accounting period to allocate income and expenses to the period in which they actually occurred.

Maturity Value

The amount that will be payable to the holder of a financial instrument at the date of its maturity; it includes the principal amount plus any accrued interest.

Interest

The cost of borrowing money or the return on investment, calculated as a percentage of the principal sum.

Percent of Sales Method

A forecasting technique that estimates future financial statements based on a predicted sales growth rate and historical financial ratios.