Assume that Cane’s customers would buy a maximum of 94,000 unitsof Alpha and 74,000 units of Beta. Also assume that the company’sraw material available for production is limited to 228,000 pounds.If Cane uses its 228,000 pounds of raw materials, up to how muchshould it be willing to pay per pound for additional rawmaterials?

Cane Company manufactures two products called Alpha and Betathat sell for $190 and $155, respectively. Each product uses onlyone type of raw material that costs $8 per pound. The company hasthe capacity to annually produce 122,000 units of each product. Itsaverage cost per unit for each product at this level of activityare given below:

	Alpha				Beta
Directmaterials		$	40			$	24
Direct labor			34				28
Variable manufacturingoverhead			21				19
Traceable fixed manufacturingoverhead			29				32
Variable selling expenses			26				22
Common fixed expenses			29				24
Total cost per unit		$	179			$	149

The company considers its traceable fixed manufacturing overheadto be avoidable, whereas its common fixed expenses are unavoidableand have been allocated to products based on sales dollars.

What contribution margin per pound of raw material is earned byeach of the two products?

Assume that Cane’s customers would buy a maximum of 94,000 unitsof Alpha and 74,000 units of Beta. Also assume that the company’sraw material available for production is limited to 228,000 pounds.How many units of each product should Cane produce to maximize itsprofits?

Assume that Cane’s customers would buy a maximum of 94,000 unitsof Alpha and 74,000 units of Beta. Also assume that the company’sraw material available for production is limited to 228,000 pounds.What is the maximum contribution margin Cane Company can earn giventhe limited quantity of raw materials?