Ralph's Mufflers Manufactures Three Different Product Lines,Model X,Model Y,and Model

Essay

Ralph's Mufflers manufactures three different product lines,Model X,Model Y,and Model Z.Considerable market demand exists for all models.The following per unit data apply:
$\begin{array}{lrrr}&\text { Model X }&\text { Model Y }&\text { Model Z }\\\text { Selling price } & \$ 160 & \$ 180 & \$ 200 \\\text { Direct materials } & 60 & 60 & 60 \\\text { Direct labor ( } \$ 20 \text { per hour) } & 30 & 30 & 40 \\\text { Variable support costs }(\$ 10 \text { per machine-hour) } & 10 & 20 & 20 \\\text { Fixed support costs } & 40 & 40 & 40\end{array}$ 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 Ralph encourage her sales people to promote the more profitable model?