Working on a McGraw Hill example question and can’t seem to get past part of it…
Bethel 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 2,200 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 3,740 units of Product TLX and 5,235 units of Product MTV. Selling prices and variable costs per unit to produce the products follow.
Product TLX: Selling price per unit: 11.5, Variable costs per unit: 3.45
Product MTV: Selling price per unit: 6.9, Variable costs per unit: 4.14
(1) Determine the company’s most profitable sales mix.
(2) Determine the contribution margin that results from that sales mix.
I got the correct profitable sales mix for the TLX product (which was 3,740 units) but I can’t find the sales mix for the MTV product. I also can’t seem to correctly guess the total contribution margin.
Infinite thanks to you, dear reader. 🙂
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