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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 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 $210,000 for the company as a whole. In addition, the following information is available about the three products: Large Medium Small Unit selling price $66 $363 $216 Unit variable cost 52 297 190 Unit contribution margin $ 14 $66 $26 Autoclave hours per unit 2 6 Total process hours per unit 4 12 12 Budgeted units of production 4,400 4,400 4,400 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 4,400 4,400 4,400 950,400 2,838,000 2,371,600 Revenues 290,400 1,597,200 1,306,800 290,400 Less: Variable costs 228,800 836,000 Contribution margin 61,600 114,400 466,400 Less: Fixed costs 210,000 Income from operations 256,400 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 Unit contribution margin 14 66 26 Autoclave hours per unit 2 6 4 Unit contribution margin per production bottleneck hour 11 6.5

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 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 $210,000 for the company as a whole. In addition, the following information is available about the three products: Large Medium Small Unit selling price $66 $363 $216 Unit variable cost 52 297 190 Unit contribution margin $ 14 $66 $26 Autoclave hours per unit 2 6 Total process hours per unit 4 12 12 Budgeted units of production 4,400 4,400 4,400 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 4,400 4,400 4,400 950,400 2,838,000 2,371,600 Revenues 290,400 1,597,200 1,306,800 290,400 Less: Variable costs 228,800 836,000 Contribution margin 61,600 114,400 466,400 Less: Fixed costs 210,000 Income from operations 256,400 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 Unit contribution margin 14 66 26 Autoclave hours per unit 2 6 4 Unit contribution margin per production bottleneck hour 11 6.5

Managerial Accounting
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter11: Differential Analysis And Product Pricing
Section: Chapter Questions
Problem 21E
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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 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 $210,000 for the company as a whole. In addition, the following information is available about the three products: Large Medium Small Unit selling price $66 $363 $216 Unit variable cost 52 297 190 Unit contribution margin $ 14 $66 $26 Autoclave hours per unit 2 4 Total process hours per unit 4 12 12 Budgeted units of production 4,400 4,400 4,400 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 4,400 4,400 4,400 Revenues 290,400 1,597,200 950,400 2,838,000 Less: Variable costs 228,800 1,306,800 836,000 2,371,600 Contribution margin 61,600 290,400 114,400 466,400 Less: Fixed costs 210,000 Income from operations 256,400 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 Unit contribution margin 14 66 26 Autoclave hours per unit 2 6 4 Unit contribution margin per production bottleneck hour 11 6.5
Transcribed Image Text: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 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 $210,000 for the company as a whole. In addition, the following information is available about the three products: Large Medium Small Unit selling price $66 $363 $216 Unit variable cost 52 297 190 Unit contribution margin $ 14 $66 $26 Autoclave hours per unit 2 4 Total process hours per unit 4 12 12 Budgeted units of production 4,400 4,400 4,400 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 4,400 4,400 4,400 Revenues 290,400 1,597,200 950,400 2,838,000 Less: Variable costs 228,800 1,306,800 836,000 2,371,600 Contribution margin 61,600 290,400 114,400 466,400 Less: Fixed costs 210,000 Income from operations 256,400 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 Unit contribution margin 14 66 26 Autoclave hours per unit 2 6 4 Unit contribution margin per production bottleneck hour 11 6.5
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