Sand Canyon Enterprises is analyzing its sales mix to find out if it is maximizing its profits.

Question:

Sand Canyon Enterprises is analyzing its sales mix to find out if it is maximizing its profits. The company produces three similar items: X, Y, and Z. All three of these products are made with the same equipment, and maximum productive capacity measured in machine hours is now being used. Products line statistics are as follows:

Current sales demand (units) Machine hours per unit Selling price per hour 105,000 158,000 95,000 10 5 13 S63 $48 $84 Un

The current production capacity is 3,000,000 machine hours.
PART 1
Determine whether the existing sales mix is the most possible. If your answer is no, offer your suggestion to improve the sales mix. Round answers to two decimal places.
PART 2
How many of each product should be manufactured and sold to maximize the company's contribution margin based on the current production activity of 3,000,000 machine hours? What is the total contribution margin for that combination?

Contribution Margin
Contribution margin is an important element of cost volume profit analysis that managers carry out to assess the maximum number of units that are required to be at the breakeven point. Contribution margin is the profit before fixed cost and taxes...

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Part 1 Contribution Selling price total variable cost X Y Z Contribution 13 9 19 Machine hours per ...View the full answer

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ISBN: 978-0133392883

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Question Posted: Mar 05, 2018 10:34 AM

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Sand Canyon Enterprises is analyzing its sales mix to find out if it is maximizing its profits.

Question:

Current sales demand (units) Machine hours per unit Selling price per hour 105,000 158,000 95,000 10 5 13 S63 $48 $84 Unit variable cost $33 $26 $49 Unit variable selling cost $17 $13 $16 IN

Step by Step Answer:

Part 1 Contribution Selling price total variable cost X Y Z Contribution 13 9 19 Machine hours per ...View the full answer

Cost Accounting A Managerial Emphasis

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