Epsilon produces two types of exercise treadmills: regular and deluxe. The exercise craze is such that Epsilon could use all its available machine hours to produce either model. The two models are processed through the same production departments. Data for both models are as follows: Click the icon to view the data.) Read the requirements i Requirements 1. What is the constraint? 2. Which model should Epsilon produce? (Hint: Use the allocation of fixed manufacturing overhead to determine the proportion of machine hours used by each product.) 3. If Epsilon should produce both models, compute the mix that will maximize operating income. Print Done Read the requirements Requirement 1. What is the constraint? Epsilon's constraint is bine the proportion of machine hours used by Requirement 1. What is the constraint? Epsilon's constraint is Requirement 2. Which each product.) roduce? (Hint: Use the allocation direct materials labor hours Epsilon should product machine hours Now prepare the produ g with the contribution margin per Requirement 2. Which model should Epsilon produce? (Hint: Use the allocation of fixed manufacturing overhead to determine the proportion of machine hours used by each product.) Epsilon should produce the product with the Now prepare the product mix analysis by starting with the contribution margin per unit. Deluxe treadmill Regular treadmill Sale price per unit Variable costs per unit Contribution margin per unit Next, calculate the proportion of machine hours used. Foed overhead Total overhead Proportion of machine hours used Deluxe Treadmill Regular Treadmill Finally, calculate the contribution margin per machine hour. Deluxe treadmill Regular treadmill Units that can be produced cach machine hour Contribution margn per machine hour Redd we Requirement 2. Which model should Epsilon produce? (Hint: Use the allocation of fixed manufacturing overhead to determine the proportion of machine hours used by each product.) Epsilon should produce the product with the Now prepare the product mix analysis by stai highest contribution margin per unit highest contribution margin per unit of the constraint highest sales price Sale price por unit lowest cost Variable costs per unit lowest sales price Contribution margin per unit Next, calculate the proportion of machine hours used Proportion of machine hours used % Faced overhead Total overhead Deluxe Treadmil Regular Treadmill Finally, calculate the contribution margin per machine hour. Deluxe Regular treadmill treadmil Units that can be produced each machine hour Contribution margin per machine hou Requirement 3. Epsilon should produce both models, compute the mix that will maximize operating income Epsilon should produce because Enter any number in the edit fields and then continue to the next question eaen machine Contribution margi half standard models and half deluxe models per machine hc only the deluxe model only the regular model Requirement 3. If Epsil Vill maximize operating income Epsilon should produce because each machine nou Contribution margin per machine hour each model contributes an equal amount to operating income for the period this model produces the highest contribution margin per unit this model produces the most contribution margin per machine hour Requirement 3. Epsilon should produce both models, compute the mix that will Epsilon should produce y because X i Data Table Per Unit Deluxe Regular Sales Price $ 970 $ 560 nd 270 110 Costs: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead 90 180 240 80 si 132 44 71 119 Variable operating expenses 851 485 Total costs $ 119 $ 75 Operating income *allocated on the basis of machine hours hit mac Print Done ields
