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 $160,000 for the company as a whole. In addition, the following information is available about the three products: Large Medium Small Unit selling price $353 $253 $133 Unit variable cost (278) (207) (117) Unit contribution margin $ 75 $ 46 $ 16 Autoclave hours per unit 6 4 2 Total process hours per unit 12 8 6 Budgeted units of production 2,600 2,600 2,600 a. Determine the contribution margin by glass type and the total company operating income for the budgeted units of production. Large Medium Small Total Units produced Revenues $ $ $ $ Variable costs Contribution margin $ $ $ $ Fixed costs 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 Medium Small Contribution margin $ $ $ Autoclave hours per unit Unit contribution margin per production bottleneck hour $ $

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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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 $160,000 for the company as a whole. In addition, the following information is available about the three products:

	Large	Medium	Small
Unit selling price	$353	$253	$133
Unit variable cost	(278)	(207)	(117)
Unit contribution margin	$ 75	$ 46	$ 16
Autoclave hours per unit	6	4	2
Total process hours per unit	12	8	6
Budgeted units of production	2,600	2,600	2,600

a. Determine the contribution margin by glass type and the total company operating income for the budgeted units of production.

	Large	Medium	Small	Total
Units produced
Revenues	$	$	$	$
Variable costs
Contribution margin	$	$	$	$
Fixed costs
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	Medium	Small
Contribution margin	$	$	$
Autoclave hours per unit
Unit contribution margin per production bottleneck hour	$	$	$

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