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A company produces three different products that all require processing on the same machines. There are only 30,000 machine hours available in each year. Production information follows:
A
B
C
Sales price per unit
$25.00
$34.00
$29.00
Variable costs per unit
$15.00
$7.00
Machine hours necessary to produce one unit
2.5
4.0
Required: Determine the preferred sales mix if there are no market constraints on any of the products. Show the contribution per machine hour, any math or formulas used to determine contribution per machine hour and sales mix. Give a brief explanation of your sales mix choice with supporting computations.
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