Canary's Products Inc. manufactures three different product lines, Basic, Better, and Best. Considerable market demand exists for all models. The following per unit data apply:

Basic Better Best

Selling price $170 $190 $210

Direct materials 60 60 60

Direct labor ($20 per hour) 30 30 40

Variable support costs ($10 per machine-hour) 10 20 20

Fixed support costs 40 40 40

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 a machine breakdown, which model is the most profitable to produce? Why?

e. How can Canary encourage its sales people to promote the more profitable model