Question
Narly Skateboards manufactures three different product lines, Base, Long, and Trick. Considerable market demand exists for all models. The following per unit data apply: Base
Narly Skateboards manufactures three different product lines, Base, Long, and Trick. Considerable market demand exists for all models. The following per unit data apply:
Base Model | Long Model | Trick Model | |
Selling price | $100 | $120 | $140 |
Direct materials | 12 | 12 | 12 |
Direct labor ($12 per hour) | 24 | 24 | 48 |
Variable support costs ($4 per machinehour) | 8 | 16 | 16 |
Fixed support costs | 20 | 20 | 20 |
How can the Vicepresident of sales at Skate Magic encourage her salespeople to promote the more profitable model?
A. Provide higher sales commissions for higher priced items and items with the greatest contribution margin per constrained resource.
B. Provide higher sales commissions for higher priced items.
C. Put all sales persons on salary.
D. Provide higher sales commissions for items with the greatest contribution margin per constrained resource.
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