Sicon Containers Produces Restaurant Storage Containers To Maximize Profits,how Many of Each Size Container Should Sicon

question 142

Essay

Sicon 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 Sicon 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.Sicon 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:
$$\begin{array} { | l | r | r | } \hline \text { Per Unit } &{ \text { Regular } } &{ \text { Large } } \\\hline \text { Sales price } & \$ 105 & \$ 225 \\\hline \text { Variable costs } & 28 & 42 \\\hline\end{array}$$ To maximize profits,how many of each size container should Sicon produce?
Given this product mix,what will the company's operating income be?

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