PR 25-6A Product pricing and profit analysis with bottl ). good, andeclesck in o Hercules Steel Company produces three grades of stee " market, anera t analysis with bottleneck operations ree grades of steel: h ules is able n is a bottleneck in Each of these products (grades) has high demand inration to sell as much as it can produce of all three. The fur the process and is running at 100% of capacity. Hercule tion profitability. The variable conversion cost is $15 per 200,000. In addition, the cost analyst was able to determin igh, good, a the market, and Hercules is wants to improve steel oper 15 per process hour. The fixec about the three products Differential Analysis, Product Pricing, and Activity-Based Costing Chapter 25 1265 h Grade 5,000 Good Grade 5,000 Regular Grade Budgeted units produced Total process hours per unit Furnace hours per unit Unit selling price Direct materials cost per unit 5,000 10 2.5 $250 $80 12 $280 $90 $270 $84 The furnace operation is part of the total process for each of these three products. Thus, for example, 4.0 of the 12.0 hours required to process High Grade steel are associated with the furnace Instructions 1. Determine the unit contribution margin for each product 2. Provide an analysis to determine the relative product profitability, assuming that the furnace is a bottleneck Number Alignment 4. A i B | C Cells with non-gray backgrounds are protected and cannot be edited. 1An asterisk) will appear to the right of an incomect entry The essay answer will not be graded High Grade Good Grade Regular Grade Selling price Variable conversion cost per unit Direct matenials cost per unit Total cost per unt Contribution margin 18 20 21 High Grade Good Grade Grade Contribution margin per unit Divided by furmace (bottleneck) hours per unit Contribution margin per furnace hour 26 27 28 Key essay answer here) Pr. 25-6A O Type here to search CHRONDS F4 F5 F6 F8 F9 2 3