Creighton Corporation produces a variety of consumer electronic products. Unit selling prices and costs for three models in one of its product lines are given below. Variable overhead cost is charged to products on the basis of direct labor hours (DLHs); fixed overhead is allocated on the basis of machine hours.

1. What is fundamentally different about the fixed versus variable overhead assigned to products? (Answer the question within the context of the relevance of this difference to the determination of short-term product mix.)
2. Calculate for each product both the gross profit per unit and the contribution margin per unit. Are either of these profitability measures useful for planning the optimum short-term product mix? Why or why not?
3. If the company has excess machine capacity but a limited amount of labor time, how should the optimum short-term product mix be determined?
4. Assume now that machine hours, not DLHs, is the limiting resource. How, if at all, would this affect the product-mix decision?
5. How can the optimum product mix be determined when there are only two products, and one or more constraints?
6. How can the optimum product mix be determined when there are more than two products, and one or more constraints?
7. What is the primary role of the management accountant in terms of planning the optimum short-term product mix?

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Selling price/unit DM costunit DL cost/unit Variable overhead costunit Fixed overhead costunit No Frills|StandardSuper ModelOptions|Model $86 $16 S30 S9 S6 $40 $10 $10 S3 S3 $70 $14 $20 S6 S6 DL rate/hour $20.00