a. For each model, compute the contribution margin per unit.

b. For each model, compute the contribution margin per machine-hour.

c. If there is excess capacity, which model is the most profitable to produce? Why?

d. If there is constrained capacity, which model is the most profitable to produce? Why?

e. How can Ralph encourage her salespeople to promote the more profitable

model?

1. Ralph's Mufflers manufactures three different product lines, Model X, Model Y, and Model Z. Considerable market demand exists for all models. The following per unit data apply: Model X Model Y Model Z Selling price $160 $180 $200 Direct materials 60 60 60 Direct labour ($20 per hour) 30 30 40 Variable support costs ($10 per machine-hour) 10 20 20 Fixed support costs 40 40 40