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

question 45

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 a machine breakdown,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:

Stockholders' Equity

The residual interest in the assets of a corporation after deducting liabilities, representing the owners' equity in the company.

Creditor

An entity (person or institution) that extends credit by lending money or extending credit lines, to which a debtor owes repayment.

Net Worth

The total assets minus total liabilities of an individual or company, representing the owner's equity.

Future Benefit

An economic advantage or return that is expected to be received in the future as a result of current or past actions.