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Youngstown Glass Company manufactures three types of safety plate glass: large, medium, and small. All three...

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 $159,000 for the company as a whole. In addition, the following information is available about the three products:

   Large    Medium    Small
Unit selling price $310 $220 $208
Unit variable cost 244 180 183
Unit contribution margin $ 66 $ 40 $ 25
Autoclave hours per unit 6 4 2
Total process hours per unit 18 8 6
Budgeted units of production 2,700 2,700 2,700

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

Large      Medium      Small      Total     
Units produced
Revenues $ $ $ $
Variable costs
Contribution margin $ $ $ $
Fixed costs
Income from operations $

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 $ $ $

Homework Answers

Answer #1
a
Large      Medium      Small      Total     
Units produced 2700 2700 2700
Revenues 837000 594000 561600 1992600
Variable costs 658800 486000 494100 1638900
Contribution margin 178200 108000 67500 353700
Fixed costs 159000
Income from operations 194700
b
Large      Medium      Small     
Contribution margin 66 40 25
Autoclave hours per unit 6 4 2
Unit contribution margin per production bottleneck hour 11.00 10.00 12.50
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