Superior Instruments produces two models of instruments. Information for each model is as follows:

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.

Instructions
a. Prepare a schedule showing the contribution margin per machine-hour for each product.
b. Explain your recommendation as to which of the two products should bediscontinued.

Transcribed Image Text:

Model A Model B Sales price per unit. - Costs and expenses per unit: $300 $150 Direct materials Direct labor $60 40 $50 20 Manufacturing overhead (applied at the rate of $24 per machine-hour, Vs of which is fixed and s variable) 24 25 72 Variable selling expenses. 62 119 Total costs and expenses per unit. Profit per unit Machine-hours required to produce one unit 234 S 66 S 31