Cane Company manufactures two products called Alpha and Beta that sell for $190 and $155, respectively. Each product uses only one type of raw material that costs $8 per pound. The company has the capacity to annually produce 122,000 units of each product. Its unit costs for each product at this level of activity are given below: Direct materials Alpha $ 40 Beta $ 24 Direct labour 34 28 Variable manufacturing overhead 21 19 Traceable fixed manufacturing overhead 29 32 Variable selling expenses 26 22 Common fixed expenses Cost per unit 29 24 $179 $149 The company considers its traceable fixed manufacturing overhead to be avoidable, whereas its common fixed expenses are deemed unavoidable and have been allocated to products based on sales dollars. 4. Assume that Cane's customers would buy a maximum of 94,000 units of Alpha and 74,000 units of Beta. Also assume that the ompany's raw material available for production is limited to 228,000 pounds. What is the maximum contribution margin Cane ompany can earn given the limited quantity of raw materials? Total contribution margin 5. Assume that Cane's customers would buy a maximum of 94,000 units of Alpha and 74,000 units of Beta. Also assume that the company's raw material available for production is limited to 228,000 pounds. Up to how much should it be willing to pay per pound or additional raw materials? (Round your answer to 2 decimal places.)
Cane Company manufactures two products called Alpha and Beta that sell for $190 and $155, respectively. Each product uses only one type of raw material that costs $8 per pound. The company has the capacity to annually produce 122,000 units of each product. Its unit costs for each product at this level of activity are given below: Direct materials Alpha $ 40 Beta $ 24 Direct labour 34 28 Variable manufacturing overhead 21 19 Traceable fixed manufacturing overhead 29 32 Variable selling expenses 26 22 Common fixed expenses Cost per unit 29 24 $179 $149 The company considers its traceable fixed manufacturing overhead to be avoidable, whereas its common fixed expenses are deemed unavoidable and have been allocated to products based on sales dollars. 4. Assume that Cane's customers would buy a maximum of 94,000 units of Alpha and 74,000 units of Beta. Also assume that the ompany's raw material available for production is limited to 228,000 pounds. What is the maximum contribution margin Cane ompany can earn given the limited quantity of raw materials? Total contribution margin 5. Assume that Cane's customers would buy a maximum of 94,000 units of Alpha and 74,000 units of Beta. Also assume that the company's raw material available for production is limited to 228,000 pounds. Up to how much should it be willing to pay per pound or additional raw materials? (Round your answer to 2 decimal places.)
Chapter1: Financial Statements And Business Decisions
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![Required information
[The following information applies to the questions displayed below.]
Cane Company manufactures two products called Alpha and Beta that sell for $190 and $155, respectively. Each product
uses only one type of raw material that costs $8 per pound. The company has the capacity to annually produce 122,000
units of each product. Its unit costs for each product at this level of activity are given below:
Direct materials
Direct labour
Variable manufacturing overhead
Traceable fixed manufacturing overhead
Variable selling expenses
Common fixed expenses
Cost per unit
Alpha
$ 40
Beta
$ 24
34
28
21
19
29
32
26
22
29
24
$179
$149
The company considers its traceable fixed manufacturing overhead to be avoidable, whereas its common fixed expenses
are deemed unavoidable and have been allocated to products based on sales dollars.
14. Assume that Cane's customers would buy a maximum of 94,000 units of Alpha and 74,000 units of Beta. Also assume that the
company's raw material available for production is limited to 228,000 pounds. What is the maximum contribution margin Cane
Company can earn given the limited quantity of raw materials?
Total contribution margin
15. Assume that Cane's customers would buy a maximum of 94,000 units of Alpha and 74,000 units of Beta. Also assume that the
company's raw material available for production is limited to 228,000 pounds. Up to how much should it be willing to pay per pound
for additional raw materials? (Round your answer to 2 decimal places.)
Maximum price to be paid per pound](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F6ab7e98f-9507-47c4-8d76-e6113ace4fcc%2F4cd5744e-9719-43b0-a772-6a2023ec4cc3%2Fq1jls18_processed.jpeg&w=3840&q=75)
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 $190 and $155, respectively. Each product
uses only one type of raw material that costs $8 per pound. The company has the capacity to annually produce 122,000
units of each product. Its unit costs for each product at this level of activity are given below:
Direct materials
Direct labour
Variable manufacturing overhead
Traceable fixed manufacturing overhead
Variable selling expenses
Common fixed expenses
Cost per unit
Alpha
$ 40
Beta
$ 24
34
28
21
19
29
32
26
22
29
24
$179
$149
The company considers its traceable fixed manufacturing overhead to be avoidable, whereas its common fixed expenses
are deemed unavoidable and have been allocated to products based on sales dollars.
14. Assume that Cane's customers would buy a maximum of 94,000 units of Alpha and 74,000 units of Beta. Also assume that the
company's raw material available for production is limited to 228,000 pounds. What is the maximum contribution margin Cane
Company can earn given the limited quantity of raw materials?
Total contribution margin
15. Assume that Cane's customers would buy a maximum of 94,000 units of Alpha and 74,000 units of Beta. Also assume that the
company's raw material available for production is limited to 228,000 pounds. Up to how much should it be willing to pay per pound
for additional raw materials? (Round your answer to 2 decimal places.)
Maximum price to be paid per pound
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