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Assume that a company currently produces two models of automotive throttle bodies (Throttle Body A and Throttle Body B). You currently have 9,000 hours of

Assume that a company currently produces two models of automotive throttle bodies (Throttle Body A and Throttle Body B). You currently have 9,000 hours of aluminum casting capacity. Considering the following sales volume demanded, average Selling Price, and Unit Variable Cost characteristics, make a recommendation for the profit-maximizing product mix of Throttle Body A and Throttle Body B (Please use the template provided):

Throttle Body A

Throttle Body B

Selling price per unit

$ 16.00

$ 24.00

Variable cost per unit

$ 12.50

$ 19.00

Units per Casting hour

50

20

Quantity Demanded

300,000

90,000

Template

Data:
Throttle Body A Throttle Body B
Selling price per unit $ 16.00 $ 24.00
Variable cost per unit $ 12.50 $ 19.00
Units per Casting Hour 50 20
Quantity Demanded 300,000 90,000
Total Casting Hours Required to satisfy Demand
Aluminum Casting Capacity = 9,000 Hours
Calculate Profit-maximizing Product Mix:
Throttle Body A Throttle Body B
Contribution Margin per unit
Contribution Margin per Casting Hour
Planned Production Volume
Total Casting Hours Required for Production Volume

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