Bricktan Inc.makes three products,basic,classic,and deluxe.The maximum Bricktan can sell is 715,000 units of basic,420,000 units of classic,and 120,000 units of deluxe.Bricktan has limited production capacity of 90,000 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 most profitable sales mix for Bricktan Inc.?
A)71,500 basic,420,000 classic and 240,000 deluxe.
B)150,000 basic,120,000 classic and 240,000 deluxe.
C)300,000 basic,240,000 classic and 120,000 deluxe.
D)600,000 basic,0 classic and 120,000 deluxe.
E)75,000 basic,420,000 classic and 120,000 deluxe.

Question

Quizplus · Accepted Answer

To determine the most profitable sales mix, calculate the contribution margin per hour for each product: Basic = $15 * 10 units/hour = $150/hour, Classic = $25 * 8 units/hour = $200/hour, Deluxe = $55 * 4 units/hour = $220/hour. Given the production capacity and maximum sales potential, the mix that maximizes the use of the highest contribution margin per hour products within the production and sales constraints is the most profitable. Option E utilizes the production capacity efficiently while maximizing sales of the higher-margin products (Classic and Deluxe) within their sales limits.