Question: Please help with the yellow fields only. Thank you. Obj. 3 PR 11-5A Product pricing and profit analysis with bottleneck operations Hercules Steel Company produces



Please help with the yellow fields only. Thank you.
Obj. 3 PR 11-5A Product pricing and profit analysis with bottleneck operations Hercules Steel Company produces three grades of steel: high, good, and regular grade. Each of these products (grades) has high demand in the market, and Hercules is able to sell as much as it can produce of all three. The furnace operation is a bottleneck in the process and is running at 100% of capacity. Hercules wants to improve steel operation profitability. The variable conversion cost is $15 per process hour. The fixed cost is $200.000. In addition, the cost analyst was able to determine the following information about the three products: Budgeted units produced Total process hours per unit Furnace hours per unit Unit selling price Direct materials cost per unit High Grade 5.000 12 $280 $90 Good Grade 5.000 11 $270 $84 Regular Grade 5,000 10 2.5 $250 $80 The furnace operation is part of the total process for each of these three products. Thus, for example, 4 of the 12 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. 3 Required investment 4 Estimated sales units 5 Required rate of return 7 Variable cost per unit: Direct materials 8 9 Direct labor 10 Factory overhead 11 Selling and administrative expenses 12 Total 13 14 15 1 16 Invested assets 17 x Rate of return 18 Desired Income/Profit 19 20 2 21 (a) 22 Variable product cost per unit 23 Plus Fixed product cost per unit 24 Cost amount per unit 25 26 (b) 27 Manufacturing cost 28 Selling and administrative expense 29 Markup % 30 31 (c.) 32 Cost amount per unit 33 x Markup % 34 Mark up per unit 35 plus Cost amount per unit 36 Normal selling price per unit 37 Ready 9-5A Product Pricing Accessibility: Investigate 0% HU #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! Fixed costs: Factory overhead Selling and administrative expenses Total 9-5A Differential Analysis $ 2 6(a) 3 Special order price 4 Special order units 5 Variable product cost per unit 7 8 Revenues 9 Costs: 10 Variable manufacturing costs 11 Income (loss) 12 13 14 6(b) 15 16 17 18 19 20 21 22 22 Reject order (Alternative 1) Accept Order (Alternative (2) $ Differential Effect on Income (Alternative 2) $ $
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