Superior Instruments produces two models of instruments. Information for each model is as follows.

The demand for either product is sufficient to keep the plant operating at full capacity (15,000 machine-hours per month). Assume that only one product is to be produced in the future.

Instructions
a. Prepare a schedule showing the contribution margin per machine-hour for each product.
b. Explain your recommendation as to which of the two products should be discontinued.

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Sales price per unit Costs and expenses per unit: Direct materials. Direct labor Manufacturing overhead (applied at the rate of $24 per machine-hour, 1/3 of which is fixed and 2/3 variable).. Variable selling expenses Total costs and expenses per unit Profit per unit Machine-hours required to produce one unit Model A $60 40 72 62 $300 234 $ 66 3 Model B $50 20 24 25 $150 119 $ 31 1