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PROBLEM 21.4B Superior Instruments produces two models of instruments. Information for each model is as Most Profitable Product Given Scarce Model A Model B Sales
PROBLEM 21.4B Superior Instruments produces two models of instruments. Information for each model is as Most Profitable Product Given Scarce Model A Model B Sales price per unit Costs and expenses per unit: $300 $150 Direct materials $60 40 $50 20 Direct labor Manufacturing overhead (applied at the rate of $24 per machine-hour, of which is fixed and variable) Variable selling expenses 72 24 25 Total costs and expenses per unit. Profit per unit Machine-hours required to produce one u 234 119 $ 66 The demand for either product is sufficient to keep the plant operating at full capacity (15,000 machine-hours per month). Assume that only one product is to be produced in the future. Prepare a schedule showing the contribution margin per machine-hour for each product. Explain your recommendation as to which of the two products should be discontinued. a. b
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