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Question - 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 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 $134,000 for the company as a whole. In addition, the following information is available about the three products:
Large
Medium
Small
Unit selling price
$244
$105
$398
Unit variable cost
192
86
350
Unit contribution margin
$52
$19
$48
Autoclave hours per unit
4
2
6
Total process hours per unit
12
18
Budgeted units of production
2,500
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.
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