Exercise 23-9 Sales mix determination and analysis LO A1 Colt Company owns a mac

Question

Exercise 23-9 Sales mix determination and analysis LO A1 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 2,300 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 3,910 units of Product TLX and 4,308 units of Product MTV. Selling prices and variable costs per unit to produce the products follow. $s per unit Selling price per unit Variable costs per unit Product TLXProduct MTV $14.00 4.20 $8.40 5.04 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 14.00 S 8.40 ariable costs Contribution margin per production hour Product TLX Product MTV Total Maximum number of units to be sold 3,910 4,308 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

Explanation / Answer

PRODUCT TLX PRODCT MTV Contribution margin per unit 9.8 3.36 (Selling price-Variable Cost) Number of units producted per hour 3 4 Contirbution margin per hour 29.4 13.44 Ranking II I PRODUCT TLX PRODCT MTV Total Maximum units to bee sold 3,910 4308 8,218 Units produced per houor 3 4 Hours required to produce the max. units 1303.333 1077 2380.333 Hours dedicated to production of each product 1223 1077 2300 Units to be produced for sales profitable units 3669 4308 Contibution margin per unit 35956.2 14474.88 50431 Total contribution margin 50431

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