Duo Company manufactures two products, Uno and Dos. Contribution margin data follow. Uno Dos Unit sales $ 12.00 $ 36.00 Less variable cost: Direct material $ 5.00 $ 6.00 Direct labor 1.00 7.00 Variable overhead 1.20 8.20 Variable selling and administrative cost .80 .80 Total variable cost $ 8.00 $ 22.00 Unit contribution margin $ 4.00 $ 14.00 Duo companys production process uses highly skilled labor, which is in short supply. The same employees work on both products and earn the same wage rate. Required: 1. Calculate the contribution margin per scarce resource for each of the products assuming an arbitrary time period for which direct laborers earn $1.00 per unit. 2. Which of Duo Companys products is most profitable?

Calculate the contribution margin per scarce resource for each of the products assuming an arbitrary time period for which direct laborers earn $1.00 per unit.

Uno
Dos

Which of Duo Companys products is most profitable?