Pans Products Inc. manufactures three different product lines, which are called Orange, Blue, and Green. Considerable market demand exists for all models. The following per unit data apply:

Orange Blue Green

Selling price $180 $195 $220

Direct materials 70 70 70

Direct labor ($20 per hour) 30 30 40

Variable support costs ($12 per machine-hour) 12 24 24

Fixed support costs 40 40 40

a. For each model, compute the contribution margin per unit.

b. For each model, compute the contribution margin per machine-hour.

c. If there is excess capacity, which model is the most profitable to produce? Why?

d. If there is a machine breakdown, which model is the most profitable to produce? Why?

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