Alexa Fashions operates three departments: Men's, Women's, and Accessories. Departmental operating income data for the third quarter of $2024$ are as follows: Store $-$ It produces plastic storage bins for household storage needs.

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Sales prices and variable costs are as follows:

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Read the requirements.

Requirement $1.$ Which product should Store $-$ It emphasize? Why?

Complete the product mix analysis to determine the contribution margin per machine hour.

Which product should Store $-$ It emphasize? Why?

Store $-$ It should emphasize the production of regular bins because this product has the higher contribution margin per machine hour.

Requirement $2.$ To maximize profits, how many of each size bin should Store $-$ It produce? $($Enter a $"0"$ for any zero amounts.$)$

Store$-$lt should spend

machine hours making

regular size bins, and

machine hours making

large size bins.

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If Alexa Fashions drops a department, it will not incur these fixed costs. Under these circumstances, should Alexa Fashions drop any of the departments? Give your reasoning.

Alexa Fashions

Analysis of Dropping the Accessories Department

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Assume that the fixed costs assigned to each department include only direct fixed

costs of the department:

Salary of the department's manager

Cost of advertising directly related to that department

Data tableStore $-$ It produces plastic storage bins for household storage needs.

$($Click the icon to view additional information.$)$

Sales prices and variable costs are as follows:

$($Click the icon to view the costs.$)$

Read the requirements.

Requirement $1.$ Which product should Store $-$ It emphasize? Why?

Complete the product mix analysis to determine the contribution margin per machine hour.

Data table

More info

The company makes two sizes of bins: large $(50$ gallon$)$ and regular $(35$ gallon$).$

Demand for the products is so high that Store $-$ It can sell as many of each size as

it can produce. The company uses the same machinery to produce both sizes. The

machinery can only be run for $3,200$ hours per period. Store $-$ It can produce $9$

large bins every hour, whereas it can produce $15$ regular bins in the same amount

of time. Fixed costs amount to $$85,000$ per period.