Answer:
P2 75,000 P3 63,000 P1 2,117
Explanation:
The computation of most profitable sales mix is shown below:-
Product P1 P2 P3
Contribution margin
per unit $5 $15 $25
Machine hour
per unit 0.08 0.17 0.33
For computing the machine hour per unit we simply divide 1 by Number of units produced per hour
Contribution margin
per hour $62.50 $88.23 $75.76
For computing the contribution margin per hour we divide contribution margin per unit by machine hour per unit
Ranking 2 1 3
A B C = A × B
Maximum units that Machine hour Machine hour
can be produced per unit Used
Product P2 75,000 0.17 12,750
Product P3 63,000 0.33 20,790
Total machine hours used 33,540
Total machine hours available 60,000
Total machine hours left to produce product P1 26,460
Machine hour per unit required
to produce product P1 0.08
no. of units produced of product P1 2,117
(26,460 × 0.08)
So, the most profitable sales mix is shown below:-
Product Mix
Product P1 2,117 1.51%
Product P2 75,000 53.53%
Product P3 63,000 44.96%
Total 140,117
