Exercise 10-6 (Algo) Sales mix LO P3

Colt Company produces two skateboard models. Machine time per unit for Hero is two hours and for Flip is one hour. The machines capacity is 1,680 hours per year. Colt can sell up to 548 units of Hero and 884 units of Flip per year. Selling prices and variable costs follow.

	Hero	Flip
Selling price per unit	$ 150	$ 95
Variable costs per unit	50	55

(a) Compute the contribution margin per machine hour for each product.
	Hero	Flip
Contribution margin per unit
Contribution margin per machine hour
(b) Determine the best sales mix of products.
	Hero	Flip	Total
Units produced and sold for most profitable sales mix
Hours required to produce most profitable sales mix
(c) Compute the total contribution margin for the best sales mix.
	Hero	Flip	Total
Units produced for most profitable sales mix
Contribution margin per unit
Total contribution margin

	Hero	Flip