Bethel Company owns a machine that can produce two specialized products. Production time for Product TLX is three units per hour and for Product MTV is four units per hour. The machine's capacity is 2,200 hours per year. Both products are sold to a single customer who has agreed to buy all of the company's output up to a maximum of 3,740 units of Product TLX and 4,272 units of Product MTV. Selling prices and variable costs per unit to produce the products follow.
Product TLX - Selling Price Per Unit = $12.50, Variable Cost per Unit =$3.75
Product MTV - Selling Price Per Unit = $7.50, Variable Cost per Unit =$4.50
1.) Determine the company's most profitable sales mix in units.
2.) Determine the contribution margin that results from that sales mix.