Production Time Assignment
February 18th, 2020
Colt 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 five 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 5,125 units of Product MTV. Selling prices and variable costs per unit to produce the products follow.
|$s per unit||Product TLX||Product MTV|
|Selling price per unit||$||11.50||$||6.90|
|Variable costs per unit||3.45||4.14|