Youngstown Glass Company manufactures three types of safety plate glass: large,

Question

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 $101,000 for the company as a whole. In addition, the following information is available about the three products:

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

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 Unit selling price $141 $248 $224 Unit variable cost 111 203 197 Unit contribution margin $ 30 $ 45 $ 27 Autoclave hours per unit 4 6 2 Total process hours per unit 12 12 6 Budgeted units of production 2,200 2,200 2,200

Explanation / Answer

(a) Particulars Large Medium Small Total Units produced 2200 2200 2200 6600 Revenues 310200 545600 492800 1348600 (141*2200) (2200*248) (2200*224) (310200+545600+492800) Variable costs 244200 446600 433400 1124200 (111*2200) (203*2200) (197*2200) (244200+446600+433400) Contribution Margin 66000 99000 59400 224400 Fixed costs 101000 Income from operations (224400 - 101000) 123400 (b) Particulars Large Medium Small Contribution Margin 30 45 27 Auto clave hours per unit 4 6 2 Unit contribution margin per production bottleneck hour 7.5 7.5 13.5 (30/4) (45/6) (27/2)

Related Questions

Navigate

• Browse (All)
• Browse Y
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.