Question 2

Tanek Industries manufactures and sells three different models of wet-dry shop vacuum cleaners. Although the shop vacs vary in terms of quality and features, all are good sellers. Tanek is currently operating at full capacity with limited machine time. Sales and production information relevant to each model follows.

		Product
		Economy		Standard		Deluxe
Selling price		$41		$68		$136
Variable costs and expenses		$22		$27		$54
Machine hours required		0.5		0.8		1.6

Calculate contribution margin per unit.

		Product
		Economy		Standard		Deluxe
Contribution margin per unit		$		$		$

Ignoring the machine time constraint, which single product should Tanek Industries produce?

What is the contribution margin per unit of limited resource for each product?

If additional machine time could be obtained, how should the additional time be used?