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Problem - 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 $165,000 for the company as a whole. In addition, the following information is available about the three products:
Large
Medium
Small
Unit selling price
$197
$154
$199
Unit variable cost
155
126
175
Unit contribution margin
$42
$28
$24
Autoclave hours per unit
6
4
2
Total process hours per unit
18
12
Budgeted units of production
3,900
Required -
a. Determine the contribution margin by glass type and the total company income from operations for the budgeted units of production.
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.
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