Container Solutions produces plastic storage bins for household storage needs. 1​(Click the icon to view additional​ information.) Sales prices and variable costs are as​ follows: 2​(Click the icon to view the​ costs.) Read the requirements3. Requirement 1. Which product should Container Solutions ​emphasize? Why? Complete the product mix analysis to determine the contribution margin per machine hour. Container Solutions 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 Which product should Container Solutions ​emphasize? Why? Container Solutions should emphasize the production of (1) because this product has the higher (2) Requirement 2. To maximize​ profits, how many of each size bin should Container Solutions ​produce? ​(Enter a​ "0" for any zero​ amounts.) Container Solutions should spend machine hours making regular size bins, and machine hours making large size bins. Requirement 3. Given this product​ mix, what will the​ company's operating income​ be? Number of regular size bins per period Contribution margin per regular size bin × Total contribution margin Fixed costs Operating income 1: More Info The company makes two sizes of​ bins: large​ (50 gallon) and regular​ (35 gallon). Demand for the products is so high that Container Solutions 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 3,000 hours per period. Container Solutions can produce 11 large bins every​ hour, whereas it can produce 15 regular bins in the same amount of time. Fixed costs amount to $85,000 per period. 2: Data Table Regular Large Sales price per unit $9.00 $11.00 Variable costs per unit 3.20 4.30 3: Requirements 1. Which product should Container Solutions ​emphasize? Why? 2. To maximize​ profits, how many of each size bin should Container Solutions ​produce? 3. Given this product​ mix, what will the​ company's operating income​ be? (1) large bins regular bins (2) contribution margin per machine hour. contribution margin per unit. sales price per unit. variable cost per unit.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Container Solutions
produces plastic storage bins for household storage needs.
1​(Click
the icon to view additional​ information.)
Sales prices and variable costs are as​ follows:
2​(Click
the icon to view the​ costs.)
 
Read the
requirements3.
 
Requirement 1. Which product should
Container Solutions
​emphasize? Why?
 
Complete the product mix analysis to determine the contribution margin per machine hour.
 
Container Solutions
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
 
 
 
 
Which product should
Container Solutions
​emphasize? Why?
 
Container Solutions
should emphasize the production of
(1) 
 
 
because this product has the higher
(2) 
 
 
Requirement 2. To maximize​ profits, how many of each size bin should
Container Solutions
​produce? ​(Enter a​ "0" for any zero​ amounts.)
 
Container Solutions should spend
 
machine hours making
 
regular size bins, and
 
machine hours making
 
large size bins.
     
Requirement 3. Given this product​ mix, what will the​ company's operating income​ be?
 
Number of regular size bins per period
 
 
Contribution margin per regular size bin
×
 
Total contribution margin
 
 
Fixed costs
 
 
Operating income
 
 
1: More Info
The company makes two sizes of​ bins: large​ (50 gallon) and regular​ (35 gallon). Demand for the products is so high that
Container Solutions
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
3,000
hours per period.
Container Solutions
can produce
11
large bins every​ hour, whereas it can produce
15
regular bins in the same amount of time. Fixed costs amount to
$85,000
per period.
2: Data Table
 
Regular
Large
Sales price per unit
$9.00
$11.00
Variable costs per unit
3.20
4.30
3: Requirements
1.
Which product should
Container Solutions
​emphasize? Why?
2.
To maximize​ profits, how many of each size bin should
Container Solutions
​produce?
3.
Given this product​ mix, what will the​ company's operating income​ be?
(1) 
 
 large bins
 
 regular bins
(2) 
 
 contribution margin per machine hour.
 
 contribution margin per unit.
 
 sales price per unit.
 
 variable cost per unit.
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