Answer the Following Questions Using the Information Below:
Dynondo's Brakes

question 188

Multiple Choice

Answer the following questions using the information below:
Dynondo'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:
$\begin{array}{lrrr}&\text { Model X }&\text { Model Y }&\text { Model Z }\\\text { Selling price } & \$ 50 & \$ 60 & \$ 70 \\\text { Direct materials } & 6 & 6 & 6 \\\text { Direct labor ( } \$ 12 \text { per hour) } & 12 & 12 & 24 \\\text { Variable support costs ( } \$ 4 \text { per machine-hour) } & 4 & 8 & 8 \\\text { Fixed support costs } & 10 & 10 & 10\end{array}$
-If there is excess capacity,which model is the most profitable to produce?

• A) Model X
• B) Model Y
• C) Model Z
• D) Both Model X and Model Y have same and highest profitability

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Definitions:

Income Statement Approach

A method used in accounting to estimate certain balances or transactions using the data primarily from the income statement.

Balance Sheet Approach

A method for evaluating a company's financial health by examining its assets, liabilities, and equity at a specific point in time.

Allowance for Doubtful Accounts

A contra-asset account that represents an estimate of receivables that may not be collectible.

Contra-Asset

An account on a company's balance sheet representing a deduction from the gross amount of an asset to calculate its net book value.