Logan Company can sell all of the standard and premier products they can produce,but it has limited production capacity.It can produce 6 standard units per hour or 4 premier units per hour,and it has 36,000 production hours available.Contribution margin per unit is $24 for the standard product and $30 for the premier product.What is the most profitable sales mix for Logan Company?
A)0 standard units and 144,000 premier units.
B)180,000 standard units and 24,000 premier units.
C)216,000 standard units and 0 premier units.
D)36,000 standard units and 120,000 premier units.
E)120,000 standard units and 64,000 premier units.

Question

Quizplus · Accepted Answer

To maximize profit, Logan Company should produce the product with the highest contribution margin per production hour. The contribution margin per hour for the standard product is $24 * 6 = $144, and for the premier product, it is $30 * 4 = $120. Therefore, producing only standard units maximizes profit, leading to 6 units/hour * 36,000 hours = 216,000 standard units.

Logan Company Can Sell All of the Standard and Premier