Question

1. 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 A condition that occurs when product demand exceeds production capacity.production bottleneck. Total fixed costs are $104,000 for the company as a whole. In addition, the following information is available about the three products:

   	Large		Medium		Small
   Unit selling price	$160		$198		$158
   Unit variable cost	126		162		139
   Unit contribution margin	$ 34		$ 36		$ 19
   Autoclave hours per unit	4		6		2
   Total process hours per unit	12		12		6
   Budgeted units of production	2,600		2,600		2,600

   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	$	$	$

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Answer 1

a
	Large	Medium	Small	Total
Units produced	2600	2600	2600
Revenues	416000	514800	410800	1341600
Variable costs	327600	421200	361400	1110200
Contribution margin	88400	93600	49400	231400
Fixed costs				104000
Income from operations				127400
b
	Large	Medium	Small
Contribution margin	34	36	19
Autoclave hours per unit	4	6	2
Unit contribution margin per production bottleneck hour	8.50	6.00	9.50