Fast Track produces two types of exercise treadmills: regular and deluxe. The exercise craze is such that Fast Track 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: BE (Click the icon to view the data.) Read the requirements. Requirement 1. What is the constraint? Fast Track's constraint is machine hours Requirement 2. Which model should Fast Track produce? (Hint: Use the allocation of fixed manufacturing overhead to determine the proportion of machine hours used by each product.) Fast Track should produce the product with the highest contribution margin per unit of the constraint Now prepare the product mix analysis by starting with the contribution margin per unit. Deluxe treadmill 960 $ Regular treadmill 550 Sale price per unit Variable costs per unit 737 415 $ 223 $ 135 Contribution margin per unit Next, calculate the proportion of machine hours used. II Proportion of machine hours used Fixed overhead 108 $ 36 Total overhead 144 Deluxe Treadmill Regular Treadmill 75 % 144 25 % Finally, calculate the contribution margin per machine hour. Deluxe treadmill Regular treadmill Units that can be produced each machine hour Contribution margin per machine hour Data Table Per Unit Deluxe Regular 960 $ 550 GA 280 90 90 178 246 82 Sales Price Costs: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead* Variable operating expenses Total costs Operating income *allocated on the basis of machine hours 108 36 121 65 845 451 115 $ 99 Print Done - i Requirements 1. What is the constraint? 2. Which model should Fast Track produce? (Hint: Use the allocation of fixed manufacturing overhead to determine the proportion of machine hours used by each product.) 3. If Fast Track should produce both models, compute the mix that will maximize operating income Print Done