Red Rock Enterprises Is Analyzing Its Sales Mix to Find

Essay

Red Rock Enterprises is analyzing its sales mix to find out if it is maximizing its profits. The company produces three similar items: Alpha, Beta, and Gamma. All three of these products are made with the same equipment, and maximum productive capacity measured in machine hours is now being used. Product line statistics are as follows:
$\begin{array}{|l|l|l|l|}\hline & \text { Alpha } & \text { Beta } & \text { Gamma } \\\hline \text { Current production and sales(units) } & 105,000 & 158,000 & \$ 5,000 \\\hline \text { Machine hours per unit } & 10 & \$ & 13 \\\hline \text { Selling price per unit } & \$ 63.00 & \$ 48.00 & \$ 84.00 \\\hline \text { Unit variable cost } & \$ 33.00 & \$ 26.00 & \$ 49.00 \\\hline \text { Unit variable selling cost } & \$ 20.00 & \$ 16.00 & \$ 19.00 \\\hline\end{array}$
Determine whether the existing sales mix is the most profitable one possible. If your answer is no, offer your suggestion to improve the sales mix. Round answers to two decimal places.