Question

Bricktan Inc. makes three products, basic, classic, and deluxe. The maximum Bricktan can sell is 100,000 units of basic, 460,000 units of classic, and 170,000 units of deluxe. Bricktan has limited production capacity of 110,000 hours. It can produce 10 units of basic, 8 units of classic, and 4 units of deluxe per hour. Contribution margin per unit is $15 for the basic, $25 for the classic, and $55 for the deluxe. What is the total contribution margin if Bricktan chooses the most profitable sales mix

Answer 1

Bricktan Inc.

The total contribution margin if Bricktan chooses the most profitable sales mix is:

= $22,350,000.

Step-by-step explanation:

a) Data and Calculations:

Basic Classic Deluxe

Sales units 100,000 460,000 170,000

Limited production capacity = 110,000 hours

Units per hour 10 8 4

Sales mix 10 8 4

Contribution per unit $15 $25 $55

Contribution per hour $150 $200 $220

Total production hours 10,000 57,500 42,500

Total contribution margin $1,500,000 $11,500,000 $9,350,000

Total contribution = $22,350,000