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 $234,000 for the company as a whole. In addition, the following information is available about the three products:

   	Large		Medium		Small
   Unit selling price	$122		$314		$158
   Unit variable cost	(96)		(257)		(139)
   Unit contribution margin	$ 26		$ 57		$ 19
   Autoclave hours per unit	4		6		2
   Total process hours per unit	12		18		4
   Budgeted units of production	5,100		5,100		5,100

   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	$	$	$

Answer 1

a
	Large	Medium	Small	Total
Units produced	5100	5100	5100
Revenues	622200	1601400	805800	3029400
Variable costs	489600	1310700	708900	2509200
Contribution margin	132600	290700	96900	520200
Fixed costs				234000
Operating income				286200
b
	Large	Medium	Small
Contribution margin	26	57	19
Autoclave hours per unit	4	6	2
Unit contribution margin per production bottleneck hour	6.50	9.50	9.50
Workings:
	Large	Medium	Small
Revenues	=5100*122	=5100*314	=5100*158
Variable costs	=5100*96	=5100*257	=5100*139