15 Required information [The following information applies to the questions displayed below.] Cane Company manufactures two products called Alpha and Beta that sell for $130 and $90, respectively. Each product uses only one type of raw material that costs $5 per pound. The company has the capacity to annually produce 102,000 units of each product. Its average cost per unit for each product at this level of activity is given below: Direct materials Direct labor Variable manufacturing overhead Traceable fixed manufacturing overhead Variable selling expenses Common fixed expenses Total cost per unit Alpha $ 25 22 17 18 14 17 $ 113 Total contribution margin Beta $ 10 21 7 20 10 12 $ 80 The company's traceable fixed manufacturing overhead is avoidable, whereas its common fixed expenses are unavoidable and have been allocated to products based on sales dollars. 14. Assume Cane's customers would buy a maximum of 82,000 units of Alpha and 62,000 units of Beta. Also assume the raw material available for production is limited to 162,000 pounds. What is the total contribution margin Cane Company will earn?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
icon
Concept explainers
Topic Video
Question
15
!
Required information
[The following information applies to the questions displayed below.]
Cane Company manufactures two products called Alpha and Beta
that sell for $130 and $90, respectively. Each product uses only one
type of raw material that costs $5 per pound. The company has the
capacity to annually produce 102,000 units of each product. Its
average cost per unit for each product at this level of activity is given
below:
Direct materials
Direct labor
Variable manufacturing overhead.
Traceable fixed manufacturing overhead
Variable selling expenses
Common fixed expenses
Total cost per unit
Alpha
$ 25
22
Total contribution margin
17
18
14
17
$ 113
Beta
$ 10
21
7
20
10
12
$ 80
The company's traceable fixed manufacturing overhead is avoidable,
whereas its common fixed expenses are unavoidable and have been
allocated to products based on sales dollars.
14. Assume Cane's customers would buy a maximum of 82,000 units of Alpha and
62,000 units of Beta. Also assume the raw material available for production is limited
to 162,000 pounds. What is the total contribution margin Cane Company will earn?
Transcribed Image Text:15 ! Required information [The following information applies to the questions displayed below.] Cane Company manufactures two products called Alpha and Beta that sell for $130 and $90, respectively. Each product uses only one type of raw material that costs $5 per pound. The company has the capacity to annually produce 102,000 units of each product. Its average cost per unit for each product at this level of activity is given below: Direct materials Direct labor Variable manufacturing overhead. Traceable fixed manufacturing overhead Variable selling expenses Common fixed expenses Total cost per unit Alpha $ 25 22 Total contribution margin 17 18 14 17 $ 113 Beta $ 10 21 7 20 10 12 $ 80 The company's traceable fixed manufacturing overhead is avoidable, whereas its common fixed expenses are unavoidable and have been allocated to products based on sales dollars. 14. Assume Cane's customers would buy a maximum of 82,000 units of Alpha and 62,000 units of Beta. Also assume the raw material available for production is limited to 162,000 pounds. What is the total contribution margin Cane Company will earn?
Required information
[The following information applies to the questions displayed below]
Cane Company manufactures two products called Alpha and Beta
that sell for $130 and $90, respectively. Each product uses only one
type of raw material that costs $5 per pound. The company has the
capacity to annually produce 102,000 units of each product. Its
average cost per unit for each product at this level of activity is given
below:
Direct materials
Direct labor
Variable manufacturing overhead
Traceable fixed manufacturing overhead
Variable selling expenses
Common fixed expenses:
Total cost per unit
Alpha
$ 25
22
17
18
14
17
$ 113
Beta
Maximum price to be paid per pound
$ 10
21
7
20
10
12
$80
The company's traceable fixed manufacturing overhead is avoidable,
whereas its common fixed expenses are unavoidable and have been
allocated to products based on sales dollars.
15. Assume Cane's customers would buy a maximum of 82,000 units of Alpha and
62,000 units of Beta. Also assume the company's raw material available for production
is limited to 162,000 pounds. If Cane uses its 162,000 pounds of raw materials, up to
how much should it be willing to pay per pound for additional raw materials?
Note: Round your answer to 2 decimal places.
Transcribed Image Text:Required information [The following information applies to the questions displayed below] Cane Company manufactures two products called Alpha and Beta that sell for $130 and $90, respectively. Each product uses only one type of raw material that costs $5 per pound. The company has the capacity to annually produce 102,000 units of each product. Its average cost per unit for each product at this level of activity is given below: Direct materials Direct labor Variable manufacturing overhead Traceable fixed manufacturing overhead Variable selling expenses Common fixed expenses: Total cost per unit Alpha $ 25 22 17 18 14 17 $ 113 Beta Maximum price to be paid per pound $ 10 21 7 20 10 12 $80 The company's traceable fixed manufacturing overhead is avoidable, whereas its common fixed expenses are unavoidable and have been allocated to products based on sales dollars. 15. Assume Cane's customers would buy a maximum of 82,000 units of Alpha and 62,000 units of Beta. Also assume the company's raw material available for production is limited to 162,000 pounds. If Cane uses its 162,000 pounds of raw materials, up to how much should it be willing to pay per pound for additional raw materials? Note: Round your answer to 2 decimal places.
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 3 steps with 4 images

Blurred answer
Knowledge Booster
Costing Systems
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education