Vancouver Company produces two products, Product Whistler and Product Blackcomb. Each product goes through its own assembly

Question:

Vancouver Company produces two products, Product Whistler and Product Blackcomb. Each product goes through its own assembly and finishing departments. However, both of them must go through the painting department. The painting department has capacity of 2,460 hours per year. Product Whistler has a unit contribution margin of $120 and requires 5 hours of painting department time. Product Blackcomb has a unit contribution margin of $75 and requires 3 hours of painting department time. There are no other constraints.

Required:

1. What is the contribution margin per hour of painting department time for each product?

2. What is the optimal mix of products?

3. What is the total contribution margin earned for the optimal mix?

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...