Denise Seals - Week Four Excerise

# Denise Seals - Week Four Excerise - Denise Seals Managerial...

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Denise Seals Managerial Accounting MBAC5213OL Dr. Lemler April 2, 2009 Week 5 – Exercises 12.11 Product Mix Decision; Single Constraint LO4 1. How many of each type of unit should be produced and sold to maximize the company’s contribution margin? What is the total contribution margin for your selection? Contribution margin = sales revenue – total variable cost Basic Contribution margin \$ 9.00 - \$ 6.00 = \$ 3.00 Number of Units 15,000/.10 = 150,000 Total contribution margin \$ 9.00 X 150,000 = \$ 1,350,000 Standard Contribution margin \$ 30.00 - \$ 20.00 = \$ 10.00 Number of Units 15,000/.50 = 30,000 Total contribution margin \$ 30.00 X 30,000 = \$ 900,000 Deluxe Contribution margin \$ 35.00 - \$ 10.00 = \$ 25.00 Number of Units 15,000/.75 = 20,000

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Total contribution margin \$ 35.00 X 20,000 = \$ 700,000 2. Now, suppose that Sealing Company believes that it can sell no more than 12,000 of the deluxe model but up to 50,000 each of the basic and standard models at the selling prices estimated. What product mix would you recommend, and what would the total
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Denise Seals - Week Four Excerise - Denise Seals Managerial...

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