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 $85,500 for the company as a whole. In addition, the following information is available
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.
- 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 $85,500 for the company as a whole. In addition, the following information is available about the three products:
|
|
Large |
Medium |
Small |
|
Unit selling price |
$182 |
$160 |
$98 |
|
Unit variable cost |
131 |
125 |
76 |
|
Unit contribution margin |
51 |
35 |
22 |
|
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 |
- Determine the contribution margin by glass type and the total company income from operations for the budgeted units of production.
- Prepare an analysis showing which product is the most profitable per bottleneck hour.
Trending now
This is a popular solution!
Step by step
Solved in 4 steps
