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?

Question

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?

Quizplus · Accepted Answer

The Answer of 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?