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Cane Company manufactures two products called Alpha and Beta that sell for $205 and $164, respectively. Each product uses only one type of raw material that costs $8 per pound. The company has the capacity to annually produce 127,000 units of each product. Its average cost per unit for each product at this level of activity are given below:

	Alpha				Beta
Direct materials		$	40			$	24
Direct labor			37				30
Variable manufacturing overhead			24				22
Traceable fixed manufacturing overhead			32				35
Variable selling expenses			29				25
Common fixed expenses			32				27
Total cost per unit		$	194			$	163

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.

9. Assume that Cane expects to produce and sell 97,000 Alphas during the current year. A supplier has offered to manufacture and deliver 97,000 Alphas to Cane for a price of $148 per unit. What is the financial advantage (disadvantage) of buying 97,000 units from the supplier instead of making those units?

10. Assume that Cane expects to produce and sell 72,000 Alphas during the current year. A supplier has offered to manufacture and deliver 72,000 Alphas to Cane for a price of $148 per unit. What is the financial advantage (disadvantage) of buying 72,000 units from the supplier instead of making those units?

11. How many pounds of raw material are needed to make one unit of each of the two products?

13. Assume that Canes customers would buy a maximum of 97,000 units of Alpha and 77,000 units of Beta. Also assume that the raw material available for production is limited to 247,000 pounds. How many units of each product should Cane produce to maximize its profits?

14. Assume that Canes customers would buy a maximum of 97,000 units of Alpha and 77,000 units of Beta. Also assume that the raw material available for production is limited to 247,000 pounds. What total contribution margin will it earn?

15. Assume that Canes customers would buy a maximum of 97,000 units of Alpha and 77,000 units of Beta. Also assume that the raw material available for production is limited to 247,000 pounds. If Cane uses its 247,000 pounds of raw materials, up to how much should it be willing to pay per pound for additional raw materials? (Round your answer to 2 decimal places.)

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