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If there is excess capacity, which model is the most profitable to produce?

If there is excess capacity, which model is the most profitable to produce?
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ACCOUNTING

Multiple Choice

Braun’s Brakes 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                                                            $50                  $60                  $70

         Direct materials                                                          6                      6                      6

         Direct labor ($12 per hour)                                       12                    12                    24

         Variable support costs ($4 per machine-hour)            4                      8                      8

         Fixed support costs                                                  10                    10                    10

 

If there is excess capacity, which model is the most profitable to produce?

         a.      Model X

         b.      Model Y

         c.      Model Z

         d.      Both Models X and Y

 

FILE: MS WORD

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