may someoneo help me resolve this please Colt Company owns a machine that can pr
ID: 2487390 • Letter: M
Question
may someoneo help me resolve this please
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 4,620 units of Product MTV. Selling prices and variable costs per unit to produce the products follow. Product TLX Product MTV Selling price per unit $ 12.00 $ 7.20 Variable costs per unit 3.60 4.32 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.)
Explanation / Answer
Product TLX Product MTV Sales Price per unit 12 7.2 Less: Variable costs per unit -3.6 -4.32 Contribution Per Unit (A) 8.4 2.88 Hours Per unit (B) 0.3333333333 0.25 (1/3) (¼) Contribution Per hour = (A/B) 25.2 11.52 Contribution Per hour for Product TLX is greater, hence we should produce maximum units for TLX Sales Mix: Units to be produced for TLX = 4080 Units Total Hours required for TLX = 4080 units * 0.333333 = 1359.9999999999 Hours Available for MTV = 2400 hours -1360 hours = 1040 Units to be produced for MTV = 1040 hours / 0.25 = 4160 units
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