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Santana Rey sees that Business Solutions's line of computer desks and chairs is popular, and she is finding it hard to keep up with demand.
Santana Rey sees that Business Solutions's line of computer desks and chairs is popular, and she is finding it hard to keep up with demand. Santana only has 1,015 direct labor hours available. She must determine the best sales mix given her limited hours. Information about the desks and chairs follows. Selling price per unit Variable costs per unit Contribution margin per unit Direct labor hours per unit Maximum demand per quarter Desks $ 1,125 500 $ 625 Chairs $ 375 200 $ 175 4 hours 50 chairs 5 hours 175 desks Required: Determine the best sales mix and the contribution margin the business will earn at that sales mix. (Round per unit amounts to 2 decimal places.) Desks Chairs Contribution margin per direct labor hour Desks Chairs Total 175 50 Maximum number of units to be sold Hours required to produce maximum units For most profitable sales mix Desks Chairs Total 1,015 Hours dedicated to the production of each product Units produced for most profitable sales mix Contribution margin per unit Total contribution margin
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