Cane Company manufactures two products called Alpha and Beta that sell for $155 and $115, respectively....

90.2K

Verified Solution

Question

Accounting

Cane Company manufactures two products called Alpha and Betathat sell for $155 and $115, respectively. Each product uses onlyone type of raw material that costs $6 per pound. The company hasthe capacity to annually produce 110,000 units of each product. Itsaverage cost per unit for each product at this level of activityare given below:
Alpha Beta
Direct materials $ 24 $ 12
Direct labor 23 26
Variable manufacturing overhead 22 12
Traceable fixed manufacturing overhead 23 25
Variable selling expenses 19 15
Common fixed expenses 22 17
Total cost per unit $ 133 $ 107
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.
13. Assume that Cane’s customers would buy a maximum of 87,000units of Alpha and 67,000 units of Beta. Also assume that the rawmaterial available for production is limited to 168,000 pounds. Howmany units of each product should Cane produce to maximize itsprofits?
Alpha:
Beta:

Answer & Explanation Solved by verified expert

3.7 Ratings (537 Votes)

SOLUTION Particulars Alpha Beta Selling price per unit A 155 115 Variable costs Direct materials 24 12 Direct labor 23 26 Variable manufacturing overhead 22 12 Variable See Answer

Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:

Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!

Become a Member

	Alpha			Beta
Direct materials		$	24		$	12
Direct labor			23			26
Variable manufacturing overhead			22			12
Traceable fixed manufacturing overhead			23			25
Variable selling expenses			19			15
Common fixed expenses			22			17
Total cost per unit		$	133		$	107