Question

Colt Company owns a machine that can produce two specialized products. Production time for Product TLX is two units per hour and for Product MTV is five units per hour. The machine's capacity is 2,750 hours per year. Both products are sold to a single customer who has agreed to buy all of the company's output up to a maximum of 4,700 units of Product TLX and 2,500 units of Product MTV. Selling prices and variable costs per unit to produce the products follow. $ per unit Selling price per unit Variable costs per unit Product TLX Product MTV $15.00 $9.50 4.80 5.50 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.)

Answer 1

Solution to the above question:

heodud 1LX Product MTV Sunili/hour qurile nowe Particulan Production line (guen) Machine capacity (2750 hours / $15.00 bolo $9.50 Selling Price / unit wisi variable cost / unit 5.50 4.80 940 10. 20 4 contribution Margin /unity No. of hours worked No. of unici Preoduced in 1 hour 5 units 2 units tour contribution Margin / Production ( contubution margin/uner X No. of units produced) 20.4 I 47.47 20 Total Product TLX 4700 Product MTV 2500 2 unies 5 units Particulars A Maximum number of units I to be sold No. of units produced in ТА WHл Hours required to Produce max. units Width: B (A; B) 2350 (4700x Y2) 500 ( 2500X Y5)

La particulan for mest Preopilable Product Tix Produd MTV Thal sales mix Hours dedicated to the Production of each product 400 2750 2350 ch Product funüs Produced for mour 2010 2000 61000 Profitable sales mix. I loror) 1400x5) with contribution margin/unit 1 10.20 Tue 40 una solu 55940 Tolal concibution nargin 479 40 8000 694009 45900 1950 (B X c) 03: