ExcerTreads produces two types of exercise treadmills: Regular and Deluxe. The exercise craze and related demand is such that ExcerTreads could use all of its available machine hours producing either model. The two models are processed through the same production department.

What product mix will maximize operating income?

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1 A 2 3 Sales price 4 Less expenses: 5 Direct materials 6 Direct labor 7 8 9 Variable manufacturing overhead Variable operating expenses 10 Total expenses 11 Operating income 12 Fixed manufacturing overhead* B C Per Unit Deluxe Regular $ 1,020 $ 580 320 110 88 186 168 84 80 40 113 69 $ 769 $ 489 $ 251 $ 91 D