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Compute the current per-unit profitability of Models A, B and C. If Model A is discontinued, compute the per-unit profitability of Models B and C,
Compute the current per-unit profitability of Models A, B and C. If Model A is discontinued, compute the per-unit profitability of Models B and C, assuming only 50 percent of the manufacturing overhead assigned to Model A goes away if Model A is dropped (as the accountant indicates). What is Jerry's course of action based on these numbers? Hint: Calculate an overhead rate per direct labor hour and use this rate to compute overhead charged to the three models (Overhead rate = Total overhead/Total DL hours). Compute profitability of each model. For Part 2, ignore Model A and repeat the calculations using a new overhead rate (assuming 50% of overhead assigned to Model A in the first part goes away)
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