StoreAway produces plastic storage bins for household storage needs. The company makes two sizes of bins: Large (50 gallon) and Regular (35 gallon). Demand for the product is so high that the company can sell as many of each size as it can produce. The same machinery is used to produce both sizes. The machinery is available for only 2,800 hours per period. The company can produce 12 Large bins every hour compared to 16 Regular bins in the same amount of time. Fixed expenses amount to $ 120,000 per period. Sales prices and variable costs are as follows:

1. Which product should StoreAway emphasize? Why?
2. To maximize profits, how many of each size bin should the company produce?
3. Given this product mix, what will the company’s operating incomebe?

  • CreatedAugust 27, 2014
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