ContainAll produces plastic storage bins for household storage needs. The company makes two sizes of bins: large (50 gallon) and regular (35 gallon). Demand for the products is so high that ContainAll 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 2,900 hours per period. ContainAll can produce 11 large bins every hour, whereas it can produce 15 regular bins in the same amount of time. Fixed costs amount to $95,000 per period.

1. Which product should ContainAll emphasize? Why?

2. To maximize profits, how many of each size bin should ContainAll produce?

3. Given this product mix, what will the company's operating income be?

Requirement 1. Which product should ContainAll emphasize? Why? Complete the product mix analysis to determine the contribution margin per machine hour.

ContainAll
Product Mix Analysis
	Regular		Large
Sales price per unit
Variable cost per unit
Contribution margin per unit
Units per machine hour
Contribution margin per machine hour

Sales prices and variable costs are as follows:

Sales price per unit

Regular Large

$8.50 $10.00

Variable costs per unit

Regular Large

$3.30 $4.00