Colt Company produces two skateboard models. Machine time per unit for Hero is 2 hours and for Flip is 1 hour. The machine's capacity is 1,600 hours per year. Colt can sell up to 500 units of Hero and 900 units of Flip per year. Selling prices and variable costs follow. Selling price per unit Variable costs per unit Machine hours per unit Maximum units sold per year Machine capacity Hero $150 $50 2 500 Flip Cequired: a) Compute the contribution margin per machine hour for each product. ) Determine the best sales mix of products. =) Compute the total contribution margin for the best sales mix $95 $55 1 900 1,600 hours per year
Colt Company produces two skateboard models. Machine time per unit for Hero is 2 hours and for Flip is 1 hour. The machine's capacity is 1,600 hours per year. Colt can sell up to 500 units of Hero and 900 units of Flip per year. Selling prices and variable costs follow. Selling price per unit Variable costs per unit Machine hours per unit Maximum units sold per year Machine capacity Hero $150 $50 2 500 Flip Cequired: a) Compute the contribution margin per machine hour for each product. ) Determine the best sales mix of products. =) Compute the total contribution margin for the best sales mix $95 $55 1 900 1,600 hours per year
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Colt Company produces two skateboard models. Machine time per unit for Hero is 2
hours and for Flip is 1 hour. The machine's capacity is 1,600 hours per year. Colt can
sell up to 500 units of Hero and 900 units of Flip per year. Selling prices and variable
costs follow.
Selling price per unit
Variable costs per unit
Machine hours per unit
Maximum units sold per year
Machine capacity
Hero
$150
$50
2
500
Flip
Required:
(a) Compute the contribution margin per machine hour for each product.
(b) Determine the best sales mix of products.
(c) Compute the total contribution margin for the best sales mix.
$95
$55
1
900
1,600 hours per year
Transcribed Image Text::
Selling price per unit
Variable costs per unit
Contribution margin per unit
Machine hours per unit
Contribution margin per machine hour
(b) Determine the best sales mix of products.
Hero
Units produced for most profitable sales mix
Contribution margin per unit
Total contribution margin.
$150
50
$100
2
$50
Hero
5 Units produced and sold for most profitable sales mix
Hours required to produce most profitable sales mix
(c) Compute the total contribution margin for the best sales mix.
Hero
500
500
$0
Flip
Flip
Flip
$95
55
$40
1
$40
Total
Total
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