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 production bottleneck. Total fixed costs are $266,000 for the company as a whole. In addition, the following information is available about the three products:

	Large		Medium		Small
Unit selling price	$179		$121		$548
Unit variable cost	141		99		482
Unit contribution margin	$ 38		$ 22		$ 66
Autoclave hours per unit	4		2		6
Total process hours per unit	12		4		12
Budgeted units of production	4,700		4,700		4,700

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

Medium Total Large Small 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. Medium Small Large Contribution margin Autoclave hours per unit Unit contribution margin per production bottleneck hour