StoreAway produces plastic storage bins for household storage needs

The company makes two sizes ofbins: large(50 gallon) and regular(35 gallon). Demand for the products is so high that StoreAway 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. StoreAway can produce 10 large bins everyhour, whereas it can produce 17 regular bins in the same amount of time. Fixed costs amount to $115,000 per period.

Sales prices and variable costs are asfollows:

Sales price per unit Regular 8.90 Large 10.30

Variable costs per unit Regular 3.00 Large 4.40

Requirements

1. Which product should StoreAway emphasize? Why?

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

2. To maximizeprofits, how many of each size bin should StoreAway produce?

3. Given this productmix, what will thecompany's operating incomebe?