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Problem - Sales Mix Decision
GAME Enterprises manufactures three computer games called Rocket Star, Game Master, and Rock Warrior. The product line data follow.
Rocket Star
Game Master
Rock Warrior
Current unit sales demand
20,000
30,000
18,000
Machine hours per unit
2.0
1.0
2.5
Selling price per unit
$20.00
$16.00
$30.00
Unit variable manufacturing costs
$12.50
$10.00
$18.75
Unit variable selling costs
$6.50
$5.00
$6.25
The current production capacity is 100,000 machine hours.
Required -
1. Which computer game should be manufactured first?
Which computer game should be manufactured second?
Which computer game should be manufactured last?
2. How many of each type of computer game should be manufactured and sold to maximize the company's contribution margin based on the current production activity of 100,000 machine hours?
What is the total contribution margin for that combination?
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