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Check my answers, please. Exer Tread produces two types of exercise treadmills: Regular and Deluxe. The exercise craze and related demand is such that Exer
Check my answers, please.
Exer Tread produces two types of exercise treadmills: Regular and Deluxe. The exercise craze and related demand is such that Exer Tread could use all of its available machine hours producing either model. The two models are processed through the same production department. E (Click the icon to view the data.) What product mix will maximize operating income? (Hint: Use the allocation of fixed manufacturing overhead to determine the proportion of machine hours used by each product.) Prepare the product mix analysis. ExerTread Product Mix Analysis Deluxe Sale price per unit 980 Regular 570 439 Variable costs per unit 645 Contribution margin per unit 335 131 Units produced with equivalent number of machine hours 2 1 Contribution margin for equivalent number of machine hours 167.50 131.00 Exer Tread should produce the product with the highest contribution margin per unit of the constraint. Two times as much overhead cost is allocated to each Deluxe model as to each Regular model. In other words, it takes two times as many machine hours to produce Deluxe model. For each unit of the Deluxe model produced ntributing produce two units of the Regular model (contributing Exer Tread should produce only the Deluxe model. 167.5 machine hour to erating income), Exer Tread can 131 per machine hour to operating income). Therefore, A B 1 1 Per Unit N Deluxe Regular 980 $ $ 570 3 Sale price 4 Less expenses: Direct materials 5 280 110 6 6 Direct labor 88 180 7 Variable manufacturing overhead 168 84 8 Fixed manufacturing overhead* 96 48 9 109 65 $ 741 $ 487 9 Variable operating expenses 10 Total expenses 11 Operating income *Allocated on the basis of machine hours $ 239 $ 83Step by Step Solution
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