Question
Colt Company owns a machine that can produce two specialized products. Production time for Product TLX is three units per hour and for Product MTV
Colt Company owns a machine that can produce two specialized products. Production time for Product TLX is three units per hour and for Product MTV is five units per hour. The machines capacity is 2,500 hours per year. Both products are sold to a single customer who has agreed to buy all of the companys output up to a maximum of 4,250 units of Product TLX and 5,765 units of Product MTV. Selling prices and variable costs per unit to produce the products follow.
$ per unit | Product TLX | Product MTV | ||||||
Selling price per unit | $ | 11.50 | $ | 6.90 | ||||
Variable costs per unit | 3.45 | 4.14 | ||||||
Determine the company's most profitable sales mix and the contribution margin that results from that sales mix. (Round per unit contribution margins to 2 decimal places.)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started