Suppose Gaurab Chakrabarti and Sean Hunt’s company, Solugen, makes peroxide-based cleaners in different strengths. The founders must decide on the best sales mix. Assume the company has a capacity of 400 hours of processing time available each month and it makes two types of cleaners, Deluxe and Premium. Information on these products follows.

Required

1. Assume the markets for both types of cleaners are unlimited. How many Deluxe cleaners and how many Premium cleanersshould the company make each month? Explain. How much total contribution margin does this mix produce each month?

2. Assume the market for the Deluxe model is limited to 60 per month, with no market limit for the Premium model. How manyDeluxe cleaners and how many Premium cleaners should the company make each month? Explain. How much totalcontribution margin does this mix produce each month?

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Premlum Deluxe Selling price per unit. Variable costs per unit Processing time per unit $70 $90 $40 $50 2 hours 1 hour