Question

Colt Company owns a machine that can produce two specialized products. Production time for Product TLX is three units per hour and for Product MTV is four units per hour. The machine's capacity is 2.100 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 3,570 units of Product TLX and 4130 units of Product MTV. Selling prices and variable costs per unit to produce the products follow. $5 per unit Selling price per unit Variable costs per unit $14.69 4.20 Determine the company's most profitable sales mix and the contribution margin that results from that sales mix (Round cost per unit answers to 2 decimal places.) Product TLX Product MTV Contribution margin per unit Units produced per hour Contribution margin per production hour $ 29 40 s 13.44 Product TLX Product MTV 3.570 Maximum number of units to be sold Hours required to produce maximum units Product TLX | Product MTV For Most Profitable Sales Mix Hours dedicated to the production of each product Units produced for most profitable sales mix Contribution margin per unit Total contribution margin

Answer 1

				product	Product
				TLX	MTV
Contribution margin per unit				9.8	3.36
units produced per hour				3	4
contribution margin per production hour				29.40	13.44
				product	Product	total
				TLX	MTV
maximum number of units to be sold				3,570	4,130
hours required to produced maximum units				1190	1033	2223
				product	Product	total
For most Profitable sales mix				TLX	MTV
hours dedicated to the production of each				1190	910	2100
	Produce most profitable units until the market demand has been satisfied
units produced for most profitable sales mix				3,570	3640
contribution margin per unit				9.8	3.36
total contribution margin				34986	12230	47216

				Keep the	Eliminate
				Department	the
					Department
Sales				2,900,000	0
Expenses:
Direct materials				630,000	0
Direct labor				680,000	0
Variable overhead				480,000	0
Variable selling & adm costs				290,000	0
Direct fixed costs				555,000	0
Indirect fixed costs				480,000	480,000
Total expenses				3,115,000	480,000
Net income(loss)				-215,000	-480,000
The canoe division should be :					Kept
if the canoe division is eliminated ,income will be:					lower by	265000
2)	No

					process
				Sell as is	further
Sales	(6000*100+12000*60)			480,000	1320000
Relevant costs
costs to process further					260,000
total relevant costs					260,000
income(loss)				480,000	1,060,000
incremetal net income (loss) if processed further					580,000	incremental income
the company should			process further

(only one question is allowed per post , I have answered three , please post Jones product in separate post)