Mehta inc.

Mehta inc. produces three different products. It operates at full capacity ot 9,000 machinehours. The following tattle provides the cost information tor the three products. Unit cost Er product Basic model Standard model Deluxe model Direct labor $15 $20 $18 Direct material $50 $40 $35 Total machine hours 4 its 5 hrs 7 hrs Selling price $115 $120 5140 Direct ovemead per unit: Total setups 4G 40 55 Ordering process1 294 294 441 Maintenance 15 21 18 Direct overhead costs for the year for 9,000 machine-hours are: Setup $50,000 Ordering process $4,125 Maintenance $46,380 Estimated total number of units for the year for 9,000 machine-hours Setup 100,000 Ordering process 50,000 Maintenance 75,000 Annual demartd tor the products: Unit oostEr Eroduct Basic model Standard model Deluxe model Annual demand 3,000 units 3,000 units 1,000 units Required 1. Calculate the oonth'bution margin fortne three products using machinenous to allocate the overhead costs. Determine the optimal product nix given your answer in A.1 and the total contribution rnarg'n. Calculate the oonhtbution margin forthe three products using ABC to allocate the overhead costs. 4. In your opinion, which ot metwo methods of allocating oyemead yields a more accurate product dost. My? 2. 3