GetFit produces two types of exercisetreadmills: Regular and Deluxe. The exercise craze is such that GetFit could use all of its available machine hours producing either model. The two models are processed through the same Production Department.

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What product mix will maximize operatingincome? (Hint: Use the allocation of fixed manufacturing overhead to determine the proportion of machine hours used by eachproduct.)

Prepare the product mix analysis.

GetFit

Product Mix Analysis

Deluxe

Regular

1

GetFit should produce the product with the

highest

lowest

contribution margin per unit of the constraint.

Two times

Four times

Five times

Half

One-third

as much overhead cost is allocated to each Deluxe model as to each Regular model. In otherwords, it takes

two times

four times

five times

half

one-third

as many machine hours to produce a Deluxe model.

For each unit of the Deluxe model produced(contributing $

nothing

to operatingincome), GetFit can produce

two units

four units

five units

less than one unit

of the Regular model(contributing $

nothing

to operatingincome). Therefore, GetFit should produce

only the Deluxe model.

only the Regular model.

two times as many Deluxe models as Regular models.

two times as many Regular models as Deluxe models.

Choose from any list or enter any number in the input fields and then continue to the next question.

Data

Per Unit

Deluxe

Regular

Sales price

. . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

1,020

$

590

Costs:

Direct materials

. . . . . . . . . . . . . . . . . . .

$

360

$

104

Direct labour

. . . . . . . . . . . . . . . . . . . . .

96

176

Variable manufacturing overhead

. . . . .

160

80

Fixed manufacturing overhead*

. . . . . .

96

48

Variable operating expenses

. . . . . . . . .

125

68

Total cost

. . . . . . . . . . . . . . . . . . . . . . . .

837

476