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Question(s) / Instruction(s):

A company manufactures three different product lines: Model X, Model Y and Model Z. Considerable market demand exists for all three models. Financial data per unit are below:

                                                                       Model X                Model Y               Model Z

Selling price                                                        $50                         $60                         $70

Direct materials                                                6                              6                              6

Direct labor ($12 per hour)                           12                           12                           24

Variable overhead costs ($4 per machine hour) 4              8                              8

Fixed overhead costs                                     10                           10                           10

Which model has the greatest contribution per unit?

 a)           Model x

 b)           Model y

 c)           Model z

 d)           Both models x and y

 

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