A firm makes three products and seeks to calculate the profitability of each:

1. Allocate Overhead based on Labour Cost and calculate the Cost per Unit and the Contribution Margin per Unit Note: Contribution = Price Variable Costs, Contribution Margin % = Contribution / Price

2. Allocate Overhead based on Machine Time and calculate the Cost per Unit and the Contribution Margin per Unit

3. Allocate Overhead based on Activity Based Costing and calculate the Cost per Unit and the Contribution Margin per Unit

4. Compare the Contribution Margins for each method of allocation