Question

1.

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 $190,000 for the company as a whole. In addition, the following information is available about the three products: Large Medium Small Unit selling price $113 $363 $224 Unit variable cost (89) (297) (197) Unit contribution margin $ 24 $ 66 $ 27 Autoclave hours per unit 4 6 2 Total process hours per unit 12 18 4 Budgeted units of production 3,600 3,600 3,600

2.

Answer 1

a segmented income statement large 3600 406800 total company medium 3600 small 3600 1306800 806400 2520000 2098800 320400 units produced Revenues variable costs contribution margin common fixed expenses operating income 1069200 237600 709200 97200 86400 421200 190000 231200 b small large 24 4 medium 66 27 6 2 contribution unit Autoclave hours per unit unit contribution margin per production bottleneck hour 6.00 11.00 13.50 small product is the most profitable product per bottleneck per hour

per unit total 87 40 26 21 478500 220000 143000 115500 957000 variable costs direct materials direct labor factory overhead selling and admin exp total variable costs fixed costs fixed factory selling and admin exp total fixed cost total cost invested assets desired ROI 240100 84400 324500 1281500 732290 14% answers a total costs 1281500 233.00 total cost per unit b total cost mark up percentage selling price 8.00% 251.64 C notes total cost per unit = total cost/units produced and sold total cost markup percentage = (desired ROI*invested assets)/total cost selling price= (total cost* markuppercentage )+total cost