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Choosing the Optimal Product Mix with One Constrained Resource Billings Company produces two products, Product...

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Accounting

Choosing the Optimal Product Mix with One Constrained Resource

Billings Company produces two products, Product Reno and Product Tahoe. Each product goes through its own assembly and finishing departments. However, both of them must go through the painting department. The painting department has capacity of 1,956 hours per year. Product Reno has a unit contribution margin of $96 and requires four hours of painting department time. Product Tahoe has a unit contribution margin of $75 and requires three hours of painting department time. There are no other constraints.

Required:

1. What is the contribution margin per hour of painting department time for each product?

Product Contribution Margin
Reno $fill in the blank 1
Tahoe $fill in the blank 2

2. What is the optimal mix of products? If an amount is zero, enter "0".

Product Optimal Mix
Reno fill in the blank 3 units
Tahoe fill in the blank 4 units

3. What is the total contribution margin earned for the optimal mix? fill in the blank 1 of 1$

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