Sabor Inc. is a medical testing laboratory that performs several tests and analyses for hospitals in the area. Four of the tests that it performs require the use of a specialized machine that can supply 14,000 hours per year. Information on the four lab tests is as follows: Test A Test B Test C Test D Charging rate $65 $51 $48 $32 Variable cost $25 $18 $13 $8 Machine hours 3 2 1 0.5 What is the contribution margin per hour of machine time for Test A

$13.33

Explanation:

Test A

Charging rate                      $65

Variable cost                        ($25)

Contribution margin             $40

Contribution margin per machine hour $40/3=$13.33

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