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 $85,000 for the company as a whole. In addition, the following information is available about the three products:

Line Item Description	Large	Medium	Small
Unit selling price	$184	$160	$100
Unit variable cost	(130)	(120)	(76)
Unit contribution margin	$ 54	$ 40	$ 24
Autoclave hours per unit	3	2	1
Total process hours per unit	5	4	2
Budgeted units of production	3,000	3,000	3,000

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

Line Item Description	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.

Line Item Description	Large	Medium	Small
Contribution margin
Autoclave hours per unit
Unit contribution margin per production bottleneck hour