Consider the following production and cost data for two products, L and C: Product L Product C...
Question:
Consider the following production and cost data for two products, L and C:
| Product L | Product C | |
| Contribution margin per unit | $33 | $28 |
| Machine-hours needed per unit | 3 hours | 2 hours |
The company can only perform 15,900 machine hours each period, due to limited skilled labor and there is unlimited demand for each product. What is the largest possible total contribution margin that can be realized each period?
Optimal Sales Mix:
A company's optimal sales mix refers to the most profitable way it can schedule its production resources between its products. When one or more production input is limited, this calculation must consider the contribution margin of each product per limited resource unit.
Answer and Explanation: 1
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If the company has unlimited demand for each product, it must simply calculate which product gives it the highest contribution margin per...
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Computing the Sales Mix with Limited Resources
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Chapter 8 / Lesson 6
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Sales mix is the cumulative goods produced by a business, ideally organized to maximize efficient use of the finite resources available. Learn how this is calculated, and how the theory of constraints is considered in the process.
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