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7 years ago
Superior Containers produces restaurant storage containers . The company makes two sizes of containers: regular (55 gallon) and large (100 gallon). Demand for the products is so high that Superior can sell as many of each size as it can produce. The company uses the same machinery to produce both sizes. The machinery can be run for only 2,500 hours per period. Superior can produce 20 regular containers every hour, whereas it can produce 8 large containers in the same amount of time. Fixed costs amount to $250,000 per period. Sales prices and variable costs are as follows:

Per Unit    Regular    Large
Sales price     $105    $225
Variable costs    28    42

To maximize profits, how many of each size container should Superior produce?
Given this product mix, what will the company's operating income be?
Textbook 
Horngren's Financial & Managerial Accounting, The Financial Chapters

Horngren's Financial & Managerial Accounting, The Financial Chapters


Edition: 5th
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#2
7 years ago
This was certainly a tough question, loving the expertise
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