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 $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	$216		$127		$598
Unit variable cost	170		104		526
Unit contribution margin	$ 46		$ 23		$ 72
Autoclave hours per unit	4		2		6
Total process hours per unit	12		6		12
Budgeted units of production	2,500		2,500		2,500

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	$_________	$_________	$_________	$_______
Less: Variable costs	_________	__________	__________	________
Contribution margin	$__________	$________	$__________	$_________
Less: 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
Unit contribution margin	$________	$_______	$_______
Autoclave hours per unit	_________	_________	________
Unit contribution margin per production bottleneck hour	$________	$_______	$_______