Product Decisions Under Bottlenecked OperationsYoungstown 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 $339,000 for the company as a whole. In addition, the following information is available about the three products: Large Medium Small Unit selling price$216 $116 $647 Unit variable cost(170) (95) (569) Unit contribution margin$ 46 $ 21 $ 78 Autoclave hours per unit4 2 6 Total process hours per unit12 4 12 Budgeted units of production5,200 5,200 5,200 a. Determine the contribution margin by glass type and the total company operating income for the budgeted units of production.LargeSmallUnits producedRevenuesVariable costsContribution marginFixed costsMediumContribution marginAutoclave urs per unitUnit contribution margin per production bottleneck hour$Operating incomeb. 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 nearestcent.LargeTotalMediumSmall

Name: Product Decisions Under Bottlenecked Operations Youngstown Glass Company manufactures three types of safety plate glass: large, medium, and small. All three products have high…
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FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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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 $339,000 for the company as a whole. In addition, the following information is available about the three products:

	Large	Medium	Small
Unit selling price	$216	$116	$647
Unit variable cost	(170)	(95)	(569)
Unit contribution margin	$ 46	$ 21	$ 78
Autoclave hours per unit	4	2	6
Total process hours per unit	12	4	12
Budgeted units of production	5,200	5,200	5,200

a. Determine the contribution margin by glass type and the total company operating income for the budgeted units of production.
Large
Small
Units produced
Revenues
Variable costs
Contribution margin
Fixed costs
Medium
Contribution margin
Autoclave urs per unit
Unit contribution margin per production bottleneck hour
$
Operating income
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
Total
Medium
Small

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