Selection of most profitable product

Java Fit, Inc., produces two basic types of espresso makers, Model A and Model B. Pertinent data are:

Per Unit

Model A Model B

Selling price $ 150.00 $ 80.00

Costs

Direct material 29.00 12.00

Direct manufacturing labor 18.00 24.00

Variable manufacturing overhead* 21.00 10.50

Fixed manufacturing overhead* 9.00 4.50

Marketing (all variable) 10.00 13.00

Total Cost 87.00 64.00

Operating Income $63.00 $16.00

*Allocated on the basis of machine-hours

The specialty coffee craze suggests that Java Fit can sell enough of either Model A or Model B to keep the plant operating at full capacity. Both products are processed through the same production departments.

Which products should be produced? Show your calculations.