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 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 $85,000 for the company as a whole. In addition, the following information is available about the three products: Large Medium Small Unit selling price $184 $160 $100 Unit variable cost 130 120 76 Unit contribution margin $ 54 $ 40 $ 24 Autoclave hours per unit 3 2 1 Total process hours per unit 5 4 2 Budgeted units of production 3,000 3,000 3,000 a. Determine the contribution margin by glass type and the total company income from operations for the budgeted units of production. Round the "Unit contribution margin per production bottleneck hour" amounts to the nearest cent. Large Medium Small Total Units produced fill in the blank 1 fill in the blank 2 fill in the blank 3 Revenues $fill in the blank 4 $fill in the blank 5 $fill in the blank 6 $fill in the blank 7 Less: Variable costs fill in the blank 8 fill in the blank 9 fill in the blank 10 fill in the blank 11 Contribution margin $fill in the blank 12 $fill in the blank 13 $fill in the blank 14 $fill in the blank 15 Less: Fixed costs fill in the blank 16 Income from operations $fill in the blank 17 b. Prepare an analysis showing which product is the most profitable per bottleneck hour. Large Medium Small Unit contribution margin $fill in the blank 18 $fill in the blank 19 $fill in the blank 20 Autoclave hours per unit fill in the blank 21 fill in the blank 22 fill in the blank 23 Unit contribution margin per production bottleneck hour $fill in the blank 24 $fill in the blank 25 $fill in the blank 26
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
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 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 $85,000 for the company as a whole. In addition, the following information is available about the three products:
| Large | Medium | Small | ||||
| Unit selling price | $184 | $160 | $100 | |||
| Unit variable cost | 130 | 120 | 76 | |||
| Unit contribution margin | $ 54 | $ 40 | $ 24 | |||
| Autoclave hours per unit | 3 | 2 | 1 | |||
| Total process hours per unit | 5 | 4 | 2 | |||
| Budgeted units of production | 3,000 | 3,000 | 3,000 |
a. Determine the contribution margin by glass type and the total company income from operations for the budgeted units of production. Round the "Unit contribution margin per production bottleneck hour" amounts to the nearest cent.
| Large | Medium | Small | Total | |
| Units produced | fill in the blank 1 | fill in the blank 2 | fill in the blank 3 | |
| Revenues | $fill in the blank 4 | $fill in the blank 5 | $fill in the blank 6 | $fill in the blank 7 |
| Less: Variable costs | fill in the blank 8 | fill in the blank 9 | fill in the blank 10 | fill in the blank 11 |
| Contribution margin | $fill in the blank 12 | $fill in the blank 13 | $fill in the blank 14 | $fill in the blank 15 |
| Less: Fixed costs | fill in the blank 16 | |||
| Income from operations | $fill in the blank 17 |
b. Prepare an analysis showing which product is the most profitable per bottleneck hour.
| Large | Medium | Small | |
| Unit contribution margin | $fill in the blank 18 | $fill in the blank 19 | $fill in the blank 20 |
| Autoclave hours per unit | fill in the blank 21 | fill in the blank 22 | fill in the blank 23 |
| Unit contribution margin per production bottleneck hour | $fill in the blank 24 | $fill in the blank 25 | $fill in the blank 26 |
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