Product Decisions Under Bottlenecked Operations Youngstown Glass Company manufac

Question

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 $326,000 for the company as a whole. In addition, the following information is available about the three products: Large Medium Small $88 $226 178 S 48 $672 591 s 81 Unit selling price Unit variable cost Unit contribution margin Autoclave hours per unit Total process hours per unit Budgeted units of production 5,000 a. Determine the contribution margin by glass type and the total company income from operations for the budgeted units of production. 72 S 16 18 5,000 5,000 Large Medium Small Total Units produced 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

Explanation / Answer

a.

b.

Large Medium Small Total Units produced 5,000 5,000 5,000 Revenues 1,130,000 (5,000*226) 440,000 (5,000*88) 3,360,000 (5,000*672) 4,930,000 Variable costs 890,000 (178*5,000) 360,000 (72*5,000) 2,955,000 (591*5,000) 4,205,000 Contribution margin 240,000 80,000 405,000 725,000 Fixed costs 326,000 Income from operations 399,000

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