Question

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 2,400 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 4,080 units of Product TLX and 4,580 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		$	14.50			$	8.70
Variable costs per unit			4.35				5.22

	Product TLX	Product MTV
Contribution margin per unit
Units produced per hour
Contribution margin per production hour
	Product TLX	Product MTV	Total
Maximum number of units to be sold	4,080	4,580
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

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.)

Answer 1

	Product TLX	Product MTV
Contribution margin per unit	10.15	3.48
	(14.50-4.35)	(8.70-5.22)
Unit Produced per Hour	3.00	4.00
Contribution margin per production hour	$30.45	$13.92
	(10.15*3)	(3.48*4)
	Product TLX	Product MTV	Total
Maximum Number of unit be sold (Given) (A)	4080	4580	8660
Hours required produce maximum units	1360	1145	2505 Hour
	(4080/3)	(4580/4)

For Maximum Profitable sales Mix	Product TLX	Product MTV	Total
Hours Dedicated the Production of each Product	1360	1040	2400 Hour
		(2400 -1360)
Unit Produced for most profitable sales mix (A)	4080	4160	8240
	(1360*3)	(1040*4)
Contribution margin per unit (B)	$10.15	$3.48
tal Contribution margin(C=A*B)	$41,412.00	$14,476.80	$55,888.80