Answer:
1.. Unit produce 20,000 deluxe units per year
Units sold $33.33
Total contribution margin $500,000
2. Basic 50,000 units
Standard 2,000 units
Deluxe 12,000 units
$470,000
Explanation:
1. Calculation to determine How many of each type of unit should be produced and sold to maximize the company's contribution margin? What is the total contribution margin for your selection?
BASIC STANDARD DELUXE
Price $9 $30 $35
Less Variable cost 6 20 10
=Contribution margin (A) 3 10 25
Machine hours (B) 0.1 0.5 0.75
Contribution margin per
machine hours (A/B) $30 $20 $33.33
Unit produce=(15,000/0.75)
Unit produce=20,000 deluxe units per year.
In order to maximize the company's contribution margin the company should sell deluxe unit with contribution margin of the amount of $ 33.33 per machine hour
Total contribution margin= 20,000 units,*$25
Total contribution margin= $500,000.
Therefore The amount of unit that should be produced is 20,000 units and $33.33 will be sold to maximize the company's contribution margin while the the total contribution margin for your selection is $500,000
2. Calculation to determine product mix would you recommend, and what would be the total contribution margin
The product mix to recommend will be:
Basic 50,000 units
Standard 2,000 units
Deluxe 12,000 units
Calculation to determine Total contribution margin
Total contribution margin= ($3 × 50,000) + ($25 × 12,000) + ($10 × 2,000)
Total contribution margin=$150,000+$300,000+$20,000
Total contribution margin = $470,000
Therefore Total contribution margin is$470,000
