Question

Bricktan Inc. makes three products, basic, classic, and deluxe. The maximum Bricktan can sell is 715,000 units of basic, 420,000 units of classic, and 120,000 units of deluxe. Bricktan has limited production capacity of 90,000 hours. It can produce 10 units of basic, 8 units of classic, and 4 units of deluxe per hour. Contribution margin per unit is $15 for the basic, $25 for the classic, and $55 for the deluxe. What is the most profitable sales mix for Bricktan Inc.? 1
A. 50,000 basic, 120,000 classic and 240,000 deluxe.
B. 75,000 basic, 420,000 classic and 120,000 deluxe.
C. 600,000 basic, 0 classic and 120,000 deluxe.
D. 71,500 basic, 420,000 classic and 240,000 deluxe.
E. 300,000 basic, 240,000 classic and 120,000 deluxe.

Answer 1

Answer:

B. 75,000 basic, 420,000 classic and 120,000 deluxe.

Explanation:

Products Available : Basic, Classic , Deluxe

Contribution margin per unit: $15 , $25, $55

Production units per hour : 10, 8 , 4

Contribution margin per production hour : $150 , $200 , $220

Maximum number of units to be sold: 715,000, 420,000, 120,000

Hours required to produce these units: 71,500, 52,500, 30,000

Units produced maximum sales : 75,000, 420,000, 120,000