A company is considering a new product, to be called Model Z. Each Model Z would have a contribution of $2,000. The total Process I assembly capacity would be sufficient to produce 5,000 Model Z per month, and the total Process II capacity would be sufficient to produce 4,000 Model Zs. Model Z would be assembled in the Model X assembly department, each Model Z requiring only half as much time as the Model X. Should Model Z be produced?

Model X Model Y Model X Model Y 39000 38000 3000 1 5000 Max Capacity 2 4000 2 6000 Production Contribution Sales for each Model Variable Costs for each/Model Direct Materials Direct Labor Variable Overhead /Unit Contribution of Each Line Contribution Process Process II Model X Assembly Model Y Assembly 24000 20000 2 4000 2 0 5000 8000 4500 8500 5000 0 3 4500 3000 Fixed Overhead 8,600,000