Colt Company owns a machine that can produce two specialized products. Productio
ID: 2583391 • Letter: C
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.
Determine the company's most profitable sales mix and the contribution margin that results from that sales mix. (Round per unit cost answers to 2 decimal places.)
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.
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. Product TLX 5 15.00 Product MTV 5 9.50 Selling price per unit Variable costs per unit 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 cost answers to 2 decimal places.)Explanation / Answer
product product TLX MTV Contribution margin per unit 10.2 4 units produced per hour 2 5 contribution margin per production hour 5.1 0.8 product product total TLX MTV max number of units to be sold 4,700 2,500 hrs required to produce max units 2350 500 2850 product product total For most profitable Sales mix TLX MTV hours dedicated to the production of each product 2,350 500 Units produced for most profitable sales mix 4,700 2,000 contribution margin per unit 10.2 4 total contribution margin 47940 8,000 55940