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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 1.375 direct labor hours available. She must determine the best sales mix given her limited hours. Information about the desks and chairs follows. Desks Chairs Selling price per unit $ 1,439.00 $ 386.00 Variable costs per unit 480.00 119.00 Contribution margin per unit $ 959.00 $ 276.00 Direct labor hours per unit 7 hours 6 hours Maximum demand per quarter 163 desks 50 chairs 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.) S Contribution margin per unit Variable costs Contribution margin per direct labor hour Desks 1.439.00 $ 480 959.00 $ Desks 163 $ Chairs 386.00 110 276.00 Chairs 50 6 Total Maximum number of units to be sold Hours required to produce maximum units 13 For most profitable sales mix Desks Chairs Total 1.375 Hours dedicated to the production of each product 7 6 Units produced for most profitable sales mix Contribution margin per unit Total contribution margin $ s 160.00 1,439,00 $ 230.240 $ 38.00 386.00 14,668 $ 244,908
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