Product Mix Decision, Single Constraint Sealing Company manufactures three types of DVD storage units. Each of the three types requires the use of a special machine that has a total operating capacity of 15,000 hours per year. Information on the three types of storage units is as follows: Basic Standard Deluxe Selling price $9.00 $30.00 $35.00 Variable cost $6.00 $20.00 $10.00 Machine hours required 0.10 0.50 0.75 Sealing's marketing director has assessed demand for the three types of storage units and believes that the firm can sell as many units as it can produce. Required: 1. How many of each type of unit should be produced and sold to maximize the company's contribution margin? If an amount box does not require an entry, leave it blank or enter "0" required, round your answers to the nearest whole value. Basic 0.1 X units Standard 0.5 x units Deluxe 0.75 X units What is the total contribution margin for vour selection?
Product Mix Decision, Single Constraint Sealing Company manufactures three types of DVD storage units. Each of the three types requires the use of a special machine that has a total operating capacity of 15,000 hours per year. Information on the three types of storage units is as follows: Basic Standard Deluxe Selling price $9.00 $30.00 $35.00 Variable cost $6.00 $20.00 $10.00 Machine hours required 0.10 0.50 0.75 Sealing's marketing director has assessed demand for the three types of storage units and believes that the firm can sell as many units as it can produce. Required: 1. How many of each type of unit should be produced and sold to maximize the company's contribution margin? If an amount box does not require an entry, leave it blank or enter "0" required, round your answers to the nearest whole value. Basic 0.1 X units Standard 0.5 x units Deluxe 0.75 X units What is the total contribution margin for vour selection?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text:Product Mix Decision, Single Constraint
Sealing Company manufactures three types of DVD storage units. Each of the three types requires the use of a special machine that has a total operating capacity of 15,000 hours per
year. Information on the three types of storage units is as follows:
Basic
Standard
Deluxe
Selling price
$9.00
$30.00
$35.00
Variable cost
$6.00
$20.00
$10.00
Machine hours required
0.10
0.50
0.75
Sealing's marketing director has assessed demand for the three types of storage units and believes that the firm can sell as many units as it can produce.
Required:
1. How many of each type of unit should be produced and sold to maximize the company's contribution margin? If an amount box does not require an entry, leave it blank or enter "0". If
required, round your answers to the nearest whole value.
Basic
0.1 X units
Standard
0.5 x units
Deluxe
0.75 X units
What is the total contribution margin for your selection?
50,000 x
Transcribed Image Text:2. Now suppose that Sealing Company believes that it can sell no more than 12,000 of the deluxe model but up to 50,000 each of the basic and standard models at the selling prices
estimated. What product mix would you recommend? If required, round your answers to the nearest whole value.
Basic
units
Standard
units
Deluxe
units
What would be the total contribution margin?
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