Essay
Canary's Products Inc. manufactures three different product lines, Basic, Better, and Best. Considerable market demand exists for all models. The following per unit data apply:
a.For each model, compute the contribution margin per unit.
b.For each model, compute the contribution margin per machine-hour.
c.If there is excess capacity, which model is the most profitable to produce? Why?
d.If there is a machine breakdown, which model is the most profitable to produce? Why?
e.How can Canary encourage its sales people to promote the more profitable model?
Correct Answer:
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a.The contribution margin per unit is:
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Correct Answer:
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$...
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