Question

Springer Products 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 $52 $60 $74 Direct materials 8 8 8 Direct labor ($16 per hour) 16 16 32 Variable support costs ($5 per machine-hour) 5 10 10 Fixed support costs 12 12 12 If there is excess capacity, which model is the most profitable to produce

Answer 1

Answer:

Model Y

Explanation:

Calculation for the which model is the most profitable to produce

Using this formula

Most profitable to produce=Selling price-Direct materials-Direct labor-Variable support costs

Let plug in the formula

Model X $52 - $8 - $16- $5 = $23

Model Y $60 - $8- $16 - $10 = $26 Most profitable

Model Z $74- $8 - $33 - $10 = $24

Therefore the model that is the most profitable to produce is MODEL Y because it has the highest amount of $26