Tread Land produces two types of exercise treadmills: regular and deluxe. The exercise craze is such that Tread Land could use all its available machine hours to produce either model. The two models are processed through the same production departments. Data for both models are as follow (Click the icon to view the data.) Read the requirements. Requirement 1. What is the constraint? Tread Land's constraint is Requirement 2. Which model should Tread Land produce? (Hint: Use the allocation of fixed manufacturing overhead to determine the proportion of machine hours used by each product.) Tread Land should produce the product with the Now prepare the product mix analysis by starting with the contribution margin per unit. Deluxe treadmill Regular treadmill Sale price per unit Variable costs per unit Contribution margin per unit Next, calculate the proportion of machine hours used. Deluxe Treadmill Regular Treadmill Fixed overhead Data table Sales Price Costs: Per Unit Deluxe Regular $ 1,000 $ 540 Direct materials Direct labor 270 110 92 180 Total overhead = Proportion of machine hours used Variable manufacturing overhead 258 86 = % Fixed manufacturing overhead* 114 38 % 117 61 Variable operating expenses Total costs 851 475 $ 149 $ 65 Deluxe treadmill Regular treadmill Operating income *allocated on the basis of machine hours Finally, calculate the contribution margin per machine hour. Units that can be produced each machine hour Contribution margin per machine hour Requirement 3. If Tread Land should produce both models, compute the mix that will maximize operating income. Tread Land should produce because Print Done