70.2K

Verified Solution

Link Copied!

Cane Company manufactures two products called Alpha and Beta that sell for $$185$ and $$120,$ respectively. Each product uses only one type of raw material that costs $$5$ per pound. The company has the capacity to annually produce $112,000$ units of each product. Its average cost per unit for each product at this level of activity are given below:

$$AlphaBetaDirect materials$ $30$$ $10$Direct labor$2229$Variable manufacturing overhead$2013$Traceable fixed manufacturing overhead$2426$Variable selling expenses$2016$Common fixed expenses$2318$Total cost per unit$ $139$$ $112$

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

$13.$ Assume that Cane$$s customers would buy a maximum of $88,000$ units of Alpha and $68,000$ units of Beta. Also assume that the raw material available for production is limited to $172,000$ pounds. How many units of each product should Cane produce to maximize its profits?

$14.$ Assume that Cane$$s customers would buy a maximum of $88,000$ units of Alpha and $68,000$ units of Beta. Also assume that the raw material available for production is limited to $172,000$ pounds. What is the total contribution margin Cane Company will earn?

$15.$ Assume that Cane$$s customers would buy a maximum of $88,000$ units of Alpha and $68,000$ units of Beta. Also assume that the company$$s raw material available for production is limited to $172,000$ pounds. If Cane uses its $172,000$ pounds of raw materials, up to how much should it be willing to pay per pound for additional raw materials?

Answer & Explanation Solved by verified expert

See Answer