Paul's Pumps manufactures three different product lines: Model A, Model B, and Model C. Plenty...
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Accounting
Paul's Pumps manufactures three different product lines: Model A, Model B, and Model C. Plenty of market demand exists for all models.The table below reports the prices and costs per unit of each product.
Model A
Model B
Model C
Selling price
$50
$60
$70
Direct materials costs
$ 6
$ 6
$ 6
Direct labor costs ($12 per labor hour)
$12
$12
$24
Variable support costs ($4 per machine hour)
$ 4
$ 8
$ 8
Fixed support costs
$10
$10
$10
Assuming that machine hours are limited (i.e., this is the constrained resource), which model is the most profitable to produce?
Select one:
a. Model A
b. Model B
c. Model C
d. Model A and B would be equally profitable
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