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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

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