Springer Products manufactures three different product lines, ...

[mcmcdaniel]

Springer Products 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:

Model X

Model Y

Model Z

Selling price

$56

$68

$78

Direct materials

7

7

7

Direct labor ($16 per hour)

16

16

32

Variable support costs ($7 per machine-hour)

7

15

14

Fixed support costs

15

15

15

How can Lisa Dynondo encourage her salespeople to promote the more profitable model?
◦ Put all sales persons on fixed salary.
◦ Provide higher sales commissions for higher priced items.
◦ Provide higher sales commissions for items with the greatest contribution margin per constrained resource.
◦ Provide higher sales commissions for items which has the lowest cost and lower sales commissions for items with highest cost.

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[mcmcdaniel]

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[apple]

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