Product Decisions Under Bottlenecked Operations Youngstown Glass Company manufactures three types of safety plate glass: large, medium, and small. All three products have high demand. Thus, Youngstown Glass is able to sell all the safety glass that it can make. The production process includes an autoclave operation, which is a pressurized heat treatment. The autoclave is a production bottleneck. Total fixed costs are $148,000 for the company as a whole. In addition, the following information is available about the three products:      Large    Medium    Small Unit selling price $226   $165   $208   Unit variable cost 178   135   183   Unit contribution margin $ 48   $ 30   $ 25   Autoclave hours per unit 6   4   2   Total process hours per unit 18   8   6   Budgeted units of production 3,200   3,200   3,200   a.  Determine the contribution margin by glass type and the total company income from operations for the budgeted units of production.   Large      Medium      Small      Total      Units produced         Revenues $ $ $ $ Variable costs         Contribution margin $ $ $ $ Fixed costs         Income from operations       $ b.  Prepare an analysis showing which product is the most profitable per bottleneck hour. Round the "Unit contribution margin per production bottleneck hour" amounts to the nearest cent.   Large     Medium     Small     Contribution margin $ $ $ Autoclave hours per unit       Unit contribution margin per production bottleneck hour $ $ $

Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter11: Differential Analysis And Product Pricing
Section: Chapter Questions
Problem 21E
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Product Decisions Under Bottlenecked Operations

Youngstown Glass Company manufactures three types of safety plate glass: large, medium, and small. All three products have high demand. Thus, Youngstown Glass is able to sell all the safety glass that it can make. The production process includes an autoclave operation, which is a pressurized heat treatment. The autoclave is a production bottleneck. Total fixed costs are $148,000 for the company as a whole. In addition, the following information is available about the three products:

     Large    Medium    Small
Unit selling price $226   $165   $208  
Unit variable cost 178   135   183  
Unit contribution margin $ 48   $ 30   $ 25  
Autoclave hours per unit 6   4   2  
Total process hours per unit 18   8   6  
Budgeted units of production 3,200   3,200   3,200  

a.  Determine the contribution margin by glass type and the total company income from operations for the budgeted units of production.

  Large      Medium      Small      Total     
Units produced        
Revenues $ $ $ $
Variable costs        
Contribution margin $ $ $ $
Fixed costs        
Income from operations       $

b.  Prepare an analysis showing which product is the most profitable per bottleneck hour. Round the "Unit contribution margin per production bottleneck hour" amounts to the nearest cent.

  Large     Medium     Small    
Contribution margin $ $ $
Autoclave hours per unit      
Unit contribution margin per production bottleneck hour $ $ $
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