Bowflex manufactures three different models of their product, Model R, Model S, and Model T. Considerable market demand exists for all models. The following per unit data apply:

Model R. Model S. Model T

Selling price $100 $120 $140

Direct materials. $10. $13. $14

Direct labor ($12 per hour) $24. $22. $48

Variable support costs ($4 per machine-hour). $8. $16. $16

Machine hours per unit 2 4 4

Variable support costs are machine time at $4 per machine hour.

Required:

a. Which model has the greatest contribution margin per unit?

b. Which model has the greatest contribution margin per machine-hour?

c. If the product mix as packaged and shipped to retailers is typically made up of 2 units of R, 1 unit of S and 3 units of T how many units of each model (round up to whole numbers) will the company need to produce to breakeven if total fixed overhead (which includes fixed support costs) is $2,040,500?

d. If in addition the company wants to make a $1,200,000 after tax profit (the corporate income tax rate is 23%) how many units (using the same sales mix as above) of each model (round up to whole numbers) will the company need to produce?