Q1. Assess Mr. Silver's argument concerning product 129 & product 243. Q2. What is the use of margin percent in the case? Q3. Shall we use margin percent or unit margin to compare profitability of product?

Mr Silver felt that the margin figures provided by the new approach (variable costing) would be more useful than the present ones for comparing the profitability of individual products. To illustrate the point, he had worked out an example. With full costing, two products, number 129 and 243, would appears as follows: Product 129 243 Standard production cost $2.54 $3.05 Selling price Unit margin Margin percent $4.34 $5.89 $1.80 $2.84 41.5 48.2 Thus, product 243 would appear to be more desirable one to sell. But on the proposed basis, the number were as follows: Product 129 243 Standard production cost $1.38 $2.37 Selling price Unit margin Margin percent $4.34 $5.89 $2.96 $3.52 68.2 59.8 According to Silver, these number made it clear that product 129 was the more profitable. At this point, the treasurer spoke up. \"If we use this new approach, the next thing we know you marketing types will be selling at your usual markup over variable costs. How are you going to pay the fixed costs then? Besides, in my 38 years of experience, it's lack of control over long run costs that can bankrupt a company. I am opposed to any proposal that causes to take myopic view of costs.\"