Question
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
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 1,161 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 Desks $ 1,350.00 570.00 $780.00 6 hours 161 desks Chairs $ 500.00 280.00 $ 220.00 5 hours 51 chairs Maximus demand per quarter 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 unit $ 780.00 $ 220.00 Direct labor hours per unit 6 5 Contribution margin per direct labor hour $ 130.00 $ 44.00 Desks Chairs Total Maximum number of units to be sold 161 51 Hours required to produce maximum units For most profitable sales mix Desks Chairs Total Hours dedicated to the production of each product 1,161 Units produced for most profitable sales mix Contribution margin per unit Total contribution margin
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