Cane Company manufactures two products called Alpha and Beta that sell for $120 and $80, respectively. Each product uses only one type of raw material that costs $6 per pound. The company has the capacity to annually produce 100,000 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 $30 20 7 16 12 15 $100 Beta $ 12 15 5 18 8 10 $68 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 80,000 units of Alpha and 60,000 units of Beta. Also assume the company' raw material available for production is limited to 160,000 pounds. If Cane uses its 160,000 pounds of raw materials, up to how muc should it be willing to pay per pound for additional raw materials?

Cane Company manufactures two products called Alpha and Beta that sell for $120 and $80, respectively. Each product uses only one type of raw material that costs $6 per pound. The company has the capacity to annually produce 100,000 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 $30 20 7 16 12 15 $100 Beta $ 12 15 5 18 8 10 $68 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 80,000 units of Alpha and 60,000 units of Beta. Also assume the company' raw material available for production is limited to 160,000 pounds. If Cane uses its 160,000 pounds of raw materials, up to how muc should it be willing to pay per pound for additional raw materials?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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