Storage 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 used to be so high that the company could sell as many of each size as it could produce. The same machinery is used to produce both sizes. The machinery is available for only 3,000 hours per period. The company can produce 10 Large bins every hour compared to 15 Regular bins in the same amount of time. Fixed expenses amount to $110,000 per period. Product mix data follows: (Click the icon to view the product mix analysis.) (Click the icon to view the operating income from the optimal product mix.) Assume that demand for Regular bins is limited to 36,000 units and demand for Large bins is limited to 25,000 units. 1. How many of each size bin should the company make now? 2. Given this product mix, what will be the company's operating income? 3. Explain why the operating income is less than it was when the company was producing its optimal product mix. Reference Sales price per unit Less: Variable cost per unit Contribution margin per unit Reference Storage Solutions Storage Solutions Product Mix Analysis Operating Income from Optimal Product Mix Regular Large Number of bins per period 45,000 $ 8.10 $ 10.50 Contribution margin per bin $ 4.60 3.50 4.20 4.60 6.30 15 10 Total contribution margin Less: Fixed expenses Operating income $ 207,000 110,000 97,000 Units per machine hour Contribution margin per machine hour EA 69.00 $ 63.00