Atlas Steel Company produces three grades of steel: high, good,and regular grade. Each of these products (grades) has high demandin the market, and Atlas is able to sell as much as it can produceof all three. The furnace operation is a bottleneck in the processand is running at 100% of capacity. Atlas wants to improve steeloperation profitability. The variable conversion cost is $6 perprocess hour. The fixed cost is $1,530,000. In addition, the costanalyst was able to determine the following information about thethree products:

High grade Good Grade Regular Grade Budgeted units of produced 6,000 6,000 6,000 Total process hours per unit 15 15 12 Furnace hours per unit 5 3 2 Unit Selling Price $375 $350 $320 Direct materials cost per unit $ 160 $140 $130 The furnace operation is part of the total process for each of these three products. Thus for example, 5 of the 15 hours required to process High Grade steel are associated with the furnace. 1. Determine the unit contribution margin for each product. 2. Provide an analysis to determine the relative product profitabilitys, assuming that the furnace is a bottleneck. 3. Assume that management wish to improve profitability by increasing prices on selected products. At what price would High and Good grades need to be offered in order to product the same relative profitability as Regular Grade Steel.