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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 five units per hour. The machine's capacity is 2,500 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 4,250 units of Product TLX and 5,905 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 $13.00 $7.80
Variable costs per unit 3.90 4.68
Problem 1: 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.)
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