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Container Solutions produces plastic storage bins for household storage needs. The company makes two sizes of bins: Large (50 gallon) and Regular (35 gallon). Demand
Container Solutions 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 product is so high that the company can sell as many of each size as it can produce. The same machinery is used to produce both sizes. The machinery is available for only 2,800 hours per period. The company can produce 10 Large bins every hour compared to 16 Regular bins in the same amount of time. Fixed expenses amount to $120,000 per period. Sales prices and variable costs are as follows: @ (Click the icon to view the costs.) 1. Which product should Container Solutions emphasize? Why? 2. To maximize prots, how many of each size bin should the company produce? 3. Given this product mix, what will the company's operating income be? 1. Which product should Container Solutions emphasize? Why? Complete the product mix analysis to determine which product Container Solutions should emphasize. Container Solutions Product Mix Analysis Data table Regular Large Sales price per unit Regular Large Less: Variable cost per unit . . . . Sales price per unit ......... $ 8.20 $ 10.50 Contribution margin per unit Variable cost per unit ....... $ 3.50 $ 4.00 Units per machine hour x x Contribution margin per machine hour -153
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