Product Decisions Under Bottlenecked Operations Pennsylvania Glass Company manuf

Question

Product Decisions Under Bottlenecked Operations

Pennsylvania Glass Company manufactures three types of safety plate glass: large, medium, and small. All three products have high demand. Thus, Pennsylvania 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 $264,000 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.

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.

$

So far this is what ive got right.. please help. Showing all work is appreciated.

   Large    Medium    Small Unit selling price $324 $110 $448 Unit variable cost 255 90 394 Unit contribution margin $ 69 $ 20 $ 54 Autoclave hours per unit 6 2 4 Total process hours per unit 18 4 8 Budgeted units of production 4,100 4,100 4,100

Explanation / Answer

Large      Medium      Small      Total      Units produced $4,100 $4,100 $4,100 Revenues $1,328,400 $451,000 $1,836,800 $3,616,200 Less: Variable costs $1,045,500 $369,000 $1,615,400 $3,029,900 Contribution margin $282,900 $82,000 $221,400 $586,300 Less: Fixed costs $264,000 Income from operations $322,300 Large     Medium     Small     Small      Contribution margin 69 20 54 Autoclave hours per unit 6 2 4 Unit contribution margin per production bottleneck hour 11.5 10 13.5

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