Wess Company has limited capacity and can produce either its standard product or its deluxe product. Additional information follows.

Per Unit Standard Deluxe

Selling price $ 92 $ 125

Direct materials 46 51

Direct labor 36 41

1.Using a single plantwide rate, the company computes overhead cost per unit of $17 for the standard model and $22 for the deluxe model. Which model should the company produce?Hint:Compute product cost per unit and compare that with selling price to get gross profit per unit.

2.Using activity-based costing, the company computes overhead cost per unit of $3 for the standard model and $44 for the deluxe model. Which model should the company produce?Hint:Compute product cost per unit and compare that with selling price per unit to get gross profit per unit.