Sales people to promote the more profitable model


Question: Norton's Mufflers manufactures three different product lines, Model X, Model Y, and Model Z. Considerable market demand exists for all models. The following unit data apply:

                                                Model X Model Y Model Z
Selling Price                                      $80   $90   $100
Direct Materials                                   30     30     30
Direct Labor ($10 per hour)                  15    15      20
Variable costs ($5 per machine hour)     5     10      10
Fixed Costs 20 20 20

If there is a machine breakdown, which model is the most profitable to produce? Why?

How can Norton encourage their sales people to promote the more profitable model?

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Accounting Basics: Sales people to promote the more profitable model
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