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Cane Company manufactures two products called Alpha and Beta that sell for $125 and $85, respectively. Each product uses only one type of raw material that costs $6 per pound. The company has the capacity to annually produce 101,000 units of each product. Its unit costs for each product at this level of activity are given below:

	Alpha				Beta
Direct materials		$	30			$	12
Direct labor			21				20
Variable manufacturing overhead			8				6
Traceable fixed manufacturing overhead			17				19
Variable selling expenses			13				9
Common fixed expenses			16				11
Total cost per unit		$	105			$	77

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

1.

What contribution margin per pound of raw material is earned by Alpha and Beta? (Round your answers to 2 decimal places.) Alpha Beta Contribution margin per pound 2. Assume that Canes customers would buy a maximum of 81,000 units of Alpha and 61,000 units of Beta. Also assume that the companys raw material available for production is limited to 161,000 pounds. How many units of each product should Cane produce to maximize its profits? Alpha Beta Units produced 3. Assume that Canes customers would buy a maximum of 81,000 units of Alpha and 61,000 units of Beta. Also assume that the companys raw material available for production is limited to 161,000 pounds. What is the maximum contribution margin Cane Company can earn given the limited quantity of raw materials? Total contribution margin 4. Assume that Canes customers would buy a maximum of 81,000 units of Alpha and 61,000 units of Beta. Also assume that the companys raw material available for production is limited to 161,000 pounds. Up to how much should it be willing to pay per pound for additional raw materials? (Round your answer to 2 decimal places.) Maximum price to be paid per pound

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