. Breckitt & Co. provides water treatment supplies to cities and counties. The R&D department has developed two potential new products: one is a new organic chemical compound that will bind with heavy metals and then be filtered out of the water, and the other is a plant-based filter that will actually filter out the metals. The products are similar enough to be produced on existing equipment, but the company would not be able to produce both of them.

Breckitt projects the following revenue and cost information for each of the products:

Compound:

Sales Price: $2,450/container

Total sales in Year 1: 15,000 containers

Direct materials: $230/container

Direct Labor: $15/hour, each container requires 12 hours of direct labor

Fixed overhead allocation: $60/machine hour (each container requires 20 machine hours)

Variable overhead allocation: $60/direct labor hour

Filter:

Sales Price: $1,600/filter

Total sales in Year 1: 25,000 filters

Direct materials: $150/filter

Direct Labor: $15/hour, each filter requires 25 hours of direct labor

Fixed overhead allocation: $60/machine hour (each filter only requires 2 machine hours)

Variable overhead allocation: $50/direct labor hour

Which product would be most profitable for Breckitt to produce?