Per Unit Deluxe Regular 1,030 $ $ 580 310 Sale price Less expenses: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead* 84 276 132 119 Variable operating expenses 921 $ Total expenses 109 $ Operating income *Allocated on the basis of machine hours AllTreads produces two types of exercise treadmills: Regular and Deluxe. The exercise craze and related demand is such that AllTreads could use all of its available machine hours producing either model. The two models are processed through the same production department. (Click the icon to view the data.) What product mix will maximize operating income? (Hint: Use the allocation of fixed manufacturing overhead to determine the proportion of machine hours used by each product.) Prepare the product mix analysis. AllTreads Product Mix Analysis Regular $ Deluxe 1,030 789 $ 580 467 Sale price per unit Variable costs per unit Contribution margin per unit Units produced with equivalent number of machine hours 241 113 241 $ Contribution margin for equivalent number of machine hours 339 AllTreads should produce the product with the highest contribution margin per unit of the constraint. Three times as much overhead cost is allocated to each Deluxe model as to each Regular model. In other words, it takes three times as many machine hours to produce a Deluxe model. For each unit of the Deluxe model produced (contributing $ produce units of the Regular model (contributing $ AllTreads should produce per machine hour to operating income), AllTreads can per machine hour to operating income). Therefore, only the Deluxe model. only the Regular model. three times as many Deluxe models as Regular models. three times as many Regular models as Deluxe models