Selection of Most Profitable Product he Flabbo Co. produces two basic types of reducing equipment, G and H. Pertinent data follow:

PER UNIT G H Sales price $100.00 $70.00 Expenses:
Direct materials $ 28.00 $13.00 Direct labor 15.00 25.00 Variable factory overhead* 25.00 12.50 Fixed factory overhead* 10.00 5.00 Selling expenses (all variable) 14.00 10.00 $ 92.00 $65.50 Net margin $ 8.00 $ 4.50 * Applied on the basis of machine-hours.
The reducing craze is such that enough of either G or H can be sold to keep the plant operating at full capacity. Both products are processed through the same production centers.

Which product should be produced? If more than one should be produced, indicate the proportions of each. Briefly explain your answer. lop5