Plz solve for part d

Q3. Identical Photo Lab has three versions of Camera C1, C2 and C3 that produce differing quality of pictures. There is a considerable market demand exists for all three versions. The following per unit data apply:

C1 C2 C3

Selling price $80 $90 $100

Direct materials 30 30 30

Direct labour ($10 per hour) 15 15 20

Variable support costsa

($5 per machine-hour) 5 10 10

Fixed support costs 20 20 20

Required:

a. Calculate the contribution margin per unit.

• Contribution Margin per unit = Selling price - DM - DL - Variable overhead cost

• CM for C1 = 80 - 30 - 15 - 5 = $30

• CM for C2 = 90 - 30 - 15 - 10 = $35

• CM for C3 = 100 - 30 - 20 - 10 = $40

b. Assume that the machine hours are a bottleneck resource, what are the appropriate calculations for decision-making?

• Machine hrs per unit = variable/ $5

• Contribution margin per machine hr =

• C1 = $30

• C2 = $35/(10/5) = $17.50

• C3 = $40/(10/5) = $20

c. Assuming there is excess capacity, which version will be most profitable and Why?

• Model C1

• It has the max contribution margin per machine hr

d. Assume there is a machine breakdown, which version will be most profitable and Why?