Deluxe Premium Selling price per unit. $70 $90 Variable costs per unit . $40 $50 Processing time per unit 1 hour 2 hours Required 1. Assume the markets for both types of cleaners are unlimited. How many Deluxe cleaners and how many Premium cleaners should the company make each month? Explain. How much total contribution margin does this mix produce each month? 2. Assume the market for the Deluxe model is limited to 60 per month, with no market limit for the Premium model. How many Deluxe cleaners and how many Premium cleaners should the company make each month? Explain. How much total contribution margin does this mix produce each month?
Deluxe Premium Selling price per unit. $70 $90 Variable costs per unit . $40 $50 Processing time per unit 1 hour 2 hours Required 1. Assume the markets for both types of cleaners are unlimited. How many Deluxe cleaners and how many Premium cleaners should the company make each month? Explain. How much total contribution margin does this mix produce each month? 2. Assume the market for the Deluxe model is limited to 60 per month, with no market limit for the Premium model. How many Deluxe cleaners and how many Premium cleaners should the company make each month? Explain. How much total contribution margin does this mix produce each month?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Suppose Gaurab Chakrabarti and Sean Hunt’s company, Solugen, makes peroxide-based cleaners in different strengths. The founders must decide on the best sales mix. Assume the company has a capacity of 400 hours of processing time available each month and it makes two types of cleaners,
Deluxe and Premium. Information on these products follows.
Transcribed Image Text:Deluxe
Premium
Selling price per unit.
$70
$90
Variable costs per unit .
$40
$50
Processing time per unit
1 hour
2 hours
Transcribed Image Text:Required
1. Assume the markets for both types of cleaners are unlimited. How many Deluxe cleaners and how
many Premium cleaners should the company make each month? Explain. How much total contribution
margin does this mix produce each month?
2. Assume the market for the Deluxe model is limited to 60 per month, with no market limit for the
Premium model. How many Deluxe cleaners and how many Premium cleaners should the company
make each month? Explain. How much total contribution margin does this mix produce each
month?
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