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

Question 170

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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:
 Model X  Model Y  Model Z  Selling price $160$180$200 Direct materials 606060 Direct labor ( $20 per hour) 303040 Variable support costs ($10 per machine-hour) 102020 Fixed support costs 404040\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?

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a.The contribution margin per unit is:
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