Garmin Ltd. manufactures two types of GPS devices, (GPSMAP 64) and (GPSMAP 78).The costs for the products are shown herebelow:

(GPSMAP 64)

(GPSMAP 78)

Units sold

900

1,600

Unit sales price

$290

$170

Variable cost per unit

Raw material

Labor

$75

$64

$60

$48

Total fixed costs = $50,000

Required:

Compute the contribution margin per unit for each of the twp products, GPSMAP 64 and 78. (10 Marks)

Assuming the fixed costs are allocated based on the units produced. Compute the selling price per unit of each product to achieve a profit margin of 35%. (10 Marks)

Assume that Garmin has a maximum working labor capacity of 2,940 labor hours. Labour hours are paid at a rate of $32 per hour. Which of the two products, (GPSMAP 64) or (GPSMAP 78) is most profitable for Garmin Ltd? Show your calculations (10 Marks)