Question
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
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.
Requirements
Dialog content starts
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 |
|
|
|
|
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started