Alpha currently makes a subassembly for its main product. The costs per unit are as follows:

Direct materials $ 45.00

Direct labor 35.00

Variable overhead 33.00

Fixed overhead 30.00

Total $143.00

Vendor has contacted Alpha with an offer to sell 5,000 of the subassemblies for $135.00 each. Alpha will eliminate $85,000 of fixed overhead if it accepts the proposal.

25) Which option, make or buy, gives Alpha the higher operating income? By how much?

Gamma makes two models, Standard and Premium. Weekly demand is estimated to be 100 units of the Standard Model and 70 units of the Premium Model. The following per unit data apply:

Standard Premium

Contribution margin per unit $18 $20

Number of machine-hours required 3 4

26) The contribution per machine-hour for each model is ________.

27) If there are 496 machine-hours available per week, how many rockers of each model should be produced to maximize profits?

28) If there are 600 machine-hours available per week, how many rockers of each model should be produced to maximize profits?