Reference no: EM132548638
Dallas Co. manufactures three sizes of product lines: Model X, Model Y, and Model Z. Product information for each product line is provided below.
Model X Model Y Model Z
Unit selling price 600 800 900
Unit costs Variable manufacturing 250 300 400
Fixed manufacturing 150 200 200
Variable selling and administrative 50 150 100
Unit profit 150 150 200
Demand in units 200 150 100
Machine hours per unit 25 30 50
The maximum machine-hours available are 13,000 per week.
Required:
Question a. For each model, compute the contribution margin per unit.
Question b. For each model, compute the contribution margin per machine-hour.
Question c. If there is excess capacity, which model is the most profitable to produce? Why?
Question d. If there is a machine breakdown, which model is the most profitable to produce? Why?
Question e. How can Dallas encourage her sales people to promote the more profitable model?
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