Colt Company owns a machine that can produce two specialized products. Productio
ID: 2523139 • Letter: C
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 2.400 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 4,080 units of Product TLX and 4,470 u nits of Product MTV Selling prices and variable costs per unit to produce the products follow. Selling price per unit Variable costs per unit $11.50 3.45 $6.90 4.14 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 Contribution margin per production hour Product TLX Product MTV Total Maximum number of units to be sold 4,080 4,470 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 marginExplanation / Answer
Product TLX Product MTV Selling price per unit 11.50 6.90 Variable costs per unit 3.45 4.14 Contribution Per unit 8.05 2.76 Number of Units per hour 3 4 Contribution margin per production hour 24.15 11.04 (8.05X3) (2.76X4) Product TLX Product MTV Total Maximum Number of units to be sold 4,080 4,470 Hours required to produce maximum units 1,360 1,117.5 2,477.5 (4080/3) (4470/4) For Most profitable sales Mix Product TLX Product MTV Total Hours dedicated to the production of each product 1360 1040 2400 Units produced for most profitable sales mix 4080 4160 Contribution Per unit 8.05 2.76 Total Contribution Margin 32,844 11,482 44,326