Dropping a product line. Timepiece Products, a clock manufacturer, operates at capacity. Constrained by machine time, the company decides to drop the most unprofitable of its three product lines. The accounting department came up with the following data from last year's operations:
|
|
Manual
|
Electric
|
Quartz
|
|
Machine Time per Unit
Selling Price per Unit
|
0.4 Hour
$20
|
2.5 Hours
$30
|
5.0 Hours
$50
|
|
Less Variable Costs per Unit
|
10
|
14
|
28
|
|
Contribution Margin
|
$10
|
$16
|
$22
|
Which line should Timepiece Products drop? (Hint: Compute the contribution per machine hour because machine time is the constraint.)