ACCOUNTING-Exercise 2517 Sales mix determination and analysis LO A1

My question is how is the 1,875 is calculated for the Units produced for most profitable sales mix for Product MTV below?Exercise 2517Sales mix determination and analysis LO A1Colt Company owns a machine that can produce two specialized products. Production time for ProductTLX is two units per hour and for Product MTV is five units per hour. The machine’s capacity is 2,500hours per year. Both products are sold to a single customer who has agreed to buy all of the company’soutput up to a maximum of 4,250 units of Product TLX and 2,215 units of Product MTV. Selling prices andvariable costs per unit to produce the products follow. Product TLX Product MTVSelling price per unit $ 12.00 $ 7.20Variable costs per unit 3.60 4.32Determine the company’s most profitable sales mix and the contribution margin that results from that salesmix. (Round cost per unit answers to 2 decimal places.) Product TLX Product MTVContribution margin per unit 8.40 2.88Units produced per hour 2 5Contribution margin per production hour 16.80 14.40 Product TLX Product MTV TotalMaximum number of units to be sold 4,250 2,215Hours required to produce maximum units 2,125 443 2,568For most profitable sales mix Product TLX Product MTV TotalHours dedicated to the production of each product 2,125 375 2,500 Produce most profitable units until the market demand has been satisfied.Units produced for most profitable sales mix 4,250 1,875Contribution margin per unit 8.40 2.88Total contribution margin 35,700 5,400 41,100

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