Sunseri Tech sells 2 products, Speakers and TV's. The speakers have a per unit contribution margin of $6 and requires 0.25 machine hours to assemble. The TV's have a per unit contribution margin of $8 and require 0.6 machine hours to assemble. I Sunseri only has 65,000 machine hours that be dedicated to production, then what will the total contribution margin if they choose to only make the most profitable product? Group of answer choices$7,840,000$1,560,000$8,450,000$4,650,000
Question
Sunseri Tech sells 2 products, Speakers and TV's. The speakers have a per unit contribution margin of 8 and require 0.6 machine hours to assemble. I Sunseri only has 65,000 machine hours that be dedicated to production, then what will the total contribution margin if they choose to only make the most profitable product? Group of answer choices1,560,0004,650,000
Solution
To answer this question, we first need to determine which product is more profitable per machine hour.
The contribution margin per machine hour for the speakers is 24.
The contribution margin per machine hour for the TVs is 13.33.
So, the speakers are more profitable per machine hour.
If Sunseri Tech dedicates all 65,000 machine hours to producing speakers, they will produce 65,000 / 0.25 = 260,000 speakers.
The total contribution margin from producing only speakers would then be 260,000 speakers * 1,560,000.
So, the answer is $1,560,000.
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