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 five 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 5,315 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 $ 13.00 $ 7.80 Variable costs per unit 3.90 4.68 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.)
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 five 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 5,315 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 $ 13.00 $ 7.80 Variable costs per unit 3.90 4.68 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.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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 five 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 5,315 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 | $ | 13.00 | $ | 7.80 | ||||
| Variable costs per unit | 3.90 | 4.68 | ||||||
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.)
Transcribed Image Text:O Answer is not complete.
Product
MTV
Product TLX
Contribution margin per unit
Units produced per hour
Contribution margin per production hour
13.00 O s
7.80 8
30
5
27.30
15.60
Product
MTV
Product TLX
Total
Maximum number of units to be sold
Hours required to produce maximum units
3,910
5,315
Product
MTV
For Most Profitable Sales Mix
Product TLX
Total
Hours dedicated to the production of each product
Units produced for most profitable sales mix
Contribution margin per unit
Total contribution margin
4 8
15.60 8
$
27.30 8 S
2$
82
62
144
%24
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