Falco Scooters' divisional managers' bonus incentives are tied to the division's net operating income (NOI, computed using GAAP). For various reasons, the division does not appear to be on track to meet the NOI target needed to earn bonuses for divisional managers. Falco Scooters' controller notes that the unit margins on City-100's are so low that the division would increase its NOI if its stops producing and selling City-100's and instead make Super300's for inventory.

a. While City-100's unit contribution margin is low, it is still positive. Conceptually, how can the controller's proposal - to stop producing and selling City-100's and instead make Super-300's for inventory - provide the division with a higher NOI?

b. Comment on the controller's proposal. Are there any problems with this proposal? Is it a good idea from the point of view of the Falco Group's shareholders?