Financial and Managerial Accounting: E25-21 Gannett Glass Company manufactures three types
Financial and Managerial Accounting E25-21 Product decisions under bottlenecked operations Gannett Glass Company manufactures three types of safety plate glasses: large, medium, and small. All three products have high demand. Thus, Gannett Glass is able to sell all the safety glass that it can make. The production process includes an autoclave operation, which is pressurized head treatment. The autoclave is production bottleneck. Total fixed costs are $550,000. In addition, the following information is available about the three products: Large Medium Small Unit selling price 240 180 120 Unit variable cost 126 80 68 Unit contribution margin 114 100 52 Autoclave hours per unit 6 10 4 Total Process hours per unit 20 16 12 Budgeted units of production 2,500 2,500 2,500
Instruction: 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.