Wess Co. has limited capacity and can produce either its standard product or its deluxe product. Additional information follows.

1. Using a single plantwide rate, the company computes overhead cost per unit of \(\$ 15\) for the standard model and \(\$ 20\) for the deluxe model.

Which model should the company produce?
2. Using activity-based costing, the company computes overhead cost per unit of \(\$ 5\) for the standard model and \(\$ 40\) for the deluxe model. Which model should the company produce? Hint: Compute product cost per unit and compare that with selling price per unit to get gross profit per unit.

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Per Unit Selling price....... Direct materials.. Direct labor.... Standard Deluxe $60 $90 30 35 20 25