3M has three microwave/convection oven products: the 312M, the 314MC, and the 316MCR. 3M's manufacturing...
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3M has three microwave/convection oven products: the 312M, the 314MC, and the 316MCR. 3M's manufacturing facility is currently operating at 90% capacity, and wants to use the unutilized capacity in further production of one of its units. The following information comes from 3M's current operations: 312M 314MC 316MCR Per Unit Data: Sales price $ 130.00 $ 143.00 $ 150.00 Variable costs 99.45 109.00 117.00 Fixed costs 16.15 18.70 17.85 Machine Hours Required* 44 42 * Fixed costs above are allocated on the basis of machine hours at $425/hour. 1. What considerations might 3M evaluate first? 2. What costs are relevant to 3M's analysis? 3. What is the contribution margin of each model? 4. What is the net income from each model? 5. Which model should 3M be producing more of? Why? Show your calculations
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