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 A condition that occurs when product demand exceeds production capacity.production bottleneck. Total fixed costs are $250,000 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 $197 $116 $398 Unit variable cost 155 95 350 Unit contribution margin $ 42 $ 21 $ 48 Autoclave hours per unit 4 2 6 Total process hours per unit 12 4 18 Budgeted units of production 5,000 5,000 5,000

Explanation / Answer

a) Contribution margin by glass type and the total company income from operations for the budgeted units of production. Large      Medium      Small      Total      Units produced 5000 5000 5000 15000 Revenues $ 985,000 $ 580,000 $ 1,990,000 $3,555,000 Variable costs $ 775,000 $ 475,000 $ 1,750,000 $3,000,000 Contribution margin $ 210,000 $ 105,000 $   240,000 $   555,000 Fixed costs $   250,000 Income from operations $   305,000 b) 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 $     42.00 $     21.00 $       48.00 Autoclave hours per unit 4.0 2.0 6.0 Unit contribution margin per production bottleneck hour $     10.50 $     10.50 $         8.00 Large and Medium safety plate glasses have the same contribution er unit of bottleneck hour. Hence, they both are most profitable.

Related Questions

Navigate

• Browse (All)
• Browse P
• Subjects

---

---

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