Scott’s Scooters Ltd. manufactures three different products, Models A, B, and C. The below per-unit data apply:

	Model A	Model B	Model C
Selling price	$110	$90	$50
Direct materials	70	40	20
Direct labour ($40/hour)	20	20	10
Variable costs ($60/machine hour)	6	10	4
Fixed manufacturing costs	10	10	10

a. If there is excess machine capacity, additional units of which model(s) should be produced first to maximize profit?

b. If there are a limited number of direct labour hours available and demand exceeds the total direct labour hours available, in what order should the models be produced to maximize total contribution margin?

Answer rating: 100% (QA)

a To maximize profit with excess machine capacity the products that generate the highest contributio... View the full answer