StoreAway produces plastic storage bins for household storage needs
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Sales prices and variable costs are as follows:
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Read the requirements
Requirement Which product should StoreAway emphasize? Why?
Complete the product mix analysis to determine the contribution margin per machine hour.
tableStoreAwaySales price per unit,Regular,LargeVariable cost per unit,,Contribution margin per unit,,Units per machine hour,,Contribution margin per machine hour,
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Requirements
The company makes two sizes of bins: large gallon and regular 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 hours per period. StoreAway can produce large bins every hour, whereas it can produce regular bins in the same amount of time. Fixed costs amount to $ per period.
Which product should StoreAway emphasize? Why?
To maximize profits, how many of each size bin should StoreAway produce?
Given this product mix, what will the company's operating income be
