Vandelay Industries Manufactures a Range of Latex Products

Multiple Choice

Vandelay Industries manufactures a range of latex products. Vandelay recently purchased new equipment to manufacture latex gloves for the medical community. The new machinery costs $70,000 and can produce 40,000 pairs of gloves each day. The raw latex material for each pair of gloves costs $.03 and Vandelay sells the gloves at a wholesale price of $.10 a pair. Vandelay's contribution margin for a pair of gloves is:

A) $.07.
B) $.13.
C) $.10.
D) $.40.