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Clean Your Junk produces residential storage containers. The company makes two sizes of containers: regular (55 gallon) and large (100 gallon). The company uses the same machinery to produce both sizes. The machinery can be run for only 2,500 hours per year. Clean can produce 20 regular containers every hour, whereas it can produce 8 large containers in the same amount of time. Fixed costs amount to $1,000,000 per year. Sales prices and variable costs are as follows: Consider each of the following INDEPENDENT scenarios: 1) To maximize profits, how many of each size container should Clean produce? Show your computation of the numbers of items. Prepare an income statement using the contribution margin format for this level of sales. Is Clean meeting the financial objectives of its stakeholders? Write a conditional IF statement that shows whether these financial objectives have been met or not met. What other strategies might Clean consider (answer this question on the conclusion tab). 2) Assume the company makes only the regular product. Clean is a price taker. The market price for the regular container recently dropped to $100 per container as there is a new low-cost online market entrant. Clean needs to earn the necessary income to satisfy its financial stakeholders. How much does Clean need to reduce its fixed costs to satisfy its required rate of return? Show your computations of all components as well as the answer. 3) Clean is deciding whether to outsource the production of a type of glue that is included in its containers. It currently costs Clean $.90 to make each bottle of glue in-house. If Clean outsources, it can buy the glue ready-made for $1.20 each and can shut down the production facilities currently used to manufacture the glue. This will save $10,000 a year in fixed costs. Clean currently spends $50,000 in fixed costs for glue. Clean needs 12,000 bottles of glue yearly. What is the cost/benefit of outsourcing and which should Clean choose? What other factors should Clean consider (answer this question on the conclusion tab)

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