Cane Company manufactures two products called Alpha and Beta that sell for $150 and $105, respectively. Each product uses only one type of raw material that costs $5 per pound. The company has the capacity to annually produce 107,000 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 25 12 21 17 20 $ 125 Total contribution margin Beta $ 10 20 10 23 13 15 $.91 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. Foundational 13-14 (Algo) 14. Assume Cane's customers would buy a maximum of 85,000 units of Alpha and 65,000 units of Beta. Also assume the raw material available for production is limited to 166,000 pounds. What is the total contribution margin Cane Company will earn?

Cane Company manufactures two products called Alpha and Beta that sell for $150 and $105, respectively. Each product uses only one type of raw material that costs $5 per pound. The company has the capacity to annually produce 107,000 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 25 12 21 17 20 $ 125 Total contribution margin Beta $ 10 20 10 23 13 15 $.91 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. Foundational 13-14 (Algo) 14. Assume Cane's customers would buy a maximum of 85,000 units of Alpha and 65,000 units of Beta. Also assume the raw material available for production is limited to 166,000 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

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