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StormLrd StormLrd
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6 years ago
Norton's Mufflers 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   $80   $90   $100
Direct materials   30   30   30
Direct labour ($10 per hour)   15   15   20
Variable support costs ($5 per machine-hour)   5   10   10
Fixed support costs   20   20   20

Required:
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 Norton encourage her sales people to promote the more profitable model?
Textbook 
Cost Accounting: A Managerial Emphasis, Canadian Edition

Cost Accounting: A Managerial Emphasis, Canadian Edition


Edition: 7th
Authors:
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btpsandbtpsand
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