Product decisions under bottlenecked operations
P. 1250 Exercise 24-21
Obj. 3Youngstown 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:
A. Determine the contribution margin by glass type and the total company income from operations for the budgeted units of production. Prepare an analysis showing which product is the most profitable per bottleneck hour.
. The information about Total Process Hours per Unit will not be used. I'm not sure why that information was given. An autoclave is a heated container for chemical reactions. You may find it helpful to Google autoclave and see a picture. Of course, you must show calculations.
Second Add the following information and answer the question below:
Youngstown has 1,700 autoclave hours and no more. Maximum consumer demand for the 3 products is:
Large = unlimited, Medium = 500 units, Small = 400 units
Special Question: Based on the 1,700 autoclave hours and consumer demand, how many units of Large, Medium and Small will be produced?
What will be the total contribution margin for all 3 products?
(That means I will produce no more that 500 units of Medium and no more than 400 units of Small.)