Raven Co. owns a machine that can produce two specialized products. Production time for Product...
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Raven Co. owns a machine that can produce two specialized products. Production time for Product X is two units per hour and for Product Z is five units per hour. The machines capacity is 2,300 hours per year. Both products are sold to a single customer who has agreed to buy all of the companys output up to a maximum of 3,910 units of Product X and 2,055 units of Product Z. Selling prices and variable costs per unit to produce the products follow.
$ per unit
Product X
Product Z
Selling price per unit
$
12.00
$
7.20
Variable costs per unit
3.60
4.32
Determine the company's most profitable sales mix and the contribution margin that results from that sales mix.
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