Colt Company owns a machine that can produce two specialized products. Production time for Product...
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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 machines capacity is 2,100 hours per year. Both products are sold to a single customer who has agreed to buy all of the companys output up to a maximum of 3,570 units of Product TLX and 4,080 units of Product MTV. Selling prices and variable costs per unit to produce the products follow.
$ per unit
Product TLX
Product MTV
Selling price per unit
$
14.00
$
8.40
Variable costs per unit
4.20
5.04
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.)
Product TLX
Product MTV
Contribution margin per unit
Contribution margin per production hour
Product TLX
Product MTV
Total
Maximum number of units to be sold
3,570
4,080
Hours required to produce maximum units
For Most Profitable Sales Mix
Product TLX
Product MTV
Total
Hours dedicated to the production of each product
Units produced for most profitable sales mix
Contribution margin per unit
Total contribution margin
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