Store - It 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 3,200 hours per period. The company can produce 12 Large bins every hour compared to 20 Regular bins in the same amount of time. Fixed expenses amount to $95,000 per period. Product mix data follows: (Click the icon to view the product mix analysis.) 3 (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 23,000 units. Reference 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. Store-It Product Mix Analysis This is a product mix decision. First determine which bin size Store - It should emphasize Regular Large Store - It should emphasize the production of size bins since they are the V size bins. Sales price per unit $ 8.60 $ 11.00 3.30 4.80 Decision: Store-It should produce Regular size bins and Less: Variable cost per unit Large size bins. Contribution margin per unit 5.30 6.20 2. Given the product mix determined above, calculate the company's operating income 20 12 Units per machine hour Store-It $ $ 74.40 Contribution margin per machine hour Operating Income from Product Mix Regular Large Total Print Done 106.00 Total contribution margin Less: Store-It Operating income 3. Explain why the operating income is less than it was when the company was producing its optimal product mix. Operating income is less than it was when Store - It was producing its optimal product mix because: Operating Income from Optimal Product Mix Number of bins per period 64,000 $ Contribution margin per bin 5.30 Total contribution margin $ 339,200 Less: Fixed expenses 95,000 $ 244,200 Operating income O A. the company had to produce fewer Regular size bins to match demand for these bins O B. the company had to give up some of the Regular bin contribution margin per machine hour in order to produce Large bins O C. A and B OD. None of the above Print Done Store - It 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 3,200 hours per period. The company can produce 12 Large bins every hour compared to 20 Regular bins in the same amount of time. Fixed expenses amount to $95,000 per period. Product mix data follows: (Click the icon to view the product mix analysis.) 3 (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 23,000 units. Reference 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. Store-It Product Mix Analysis This is a product mix decision. First determine which bin size Store - It should emphasize Regular Large Store - It should emphasize the production of size bins since they are the V size bins. Sales price per unit $ 8.60 $ 11.00 3.30 4.80 Decision: Store-It should produce Regular size bins and Less: Variable cost per unit Large size bins. Contribution margin per unit 5.30 6.20 2. Given the product mix determined above, calculate the company's operating income 20 12 Units per machine hour Store-It $ $ 74.40 Contribution margin per machine hour Operating Income from Product Mix Regular Large Total Print Done 106.00 Total contribution margin Less: Store-It Operating income 3. Explain why the operating income is less than it was when the company was producing its optimal product mix. Operating income is less than it was when Store - It was producing its optimal product mix because: Operating Income from Optimal Product Mix Number of bins per period 64,000 $ Contribution margin per bin 5.30 Total contribution margin $ 339,200 Less: Fixed expenses 95,000 $ 244,200 Operating income O A. the company had to produce fewer Regular size bins to match demand for these bins O B. the company had to give up some of the Regular bin contribution margin per machine hour in order to produce Large bins O C. A and B OD. None of the above Print Done