[The following information applies to the questions displayed below.)Cane Company manufactures two products called Alpha and Beta that sell for $210 and $172, respectively. Each productuses only one type of raw material that costs $8 per pound. The company has the capacity to annually produce 128,000units of each product. Its average cost per unit for each product at this level of activity are given below:Direct materialsDirect laborVariable manufacturing overheadTraceable fixed manufacturing overheadVariable selling expensesCommon fixed expensesTotal cost per unitAlpha$ 403825333033$ 199Total contribution marginBeta$ 243423362628$ 171The company considers its traceable fixed manufacturing overhead to be avoidable, whereas its common fixed expensesare unavoidable and have been allocated to products based on sales dollars.14. Assume that Cane's customers would buy a maximum of 98,000 units of Alpha and 78,000 units of Beta. Also assume that the rawmaterial available for production is limited to 248,000 pounds. What is the total contribution margin Cane Company will earn?

Contribution margin means sales less variable cost.Contribution margin = Sales - Variable…

Cane Company manufactures two products called Alpha and Beta that sell for $210 and $172, respectively. Each product uses only one type of raw material that costs $8 per pound. The company has the capacity to annually produce 128,000 units of each product. Its average cost per unit for each product at this level of activity are given below: Direct materials Direct labor Variable manufacturing overhead Traceable fixed manufacturing overhead Variable selling expenses Connon fixed expenses Total cost per unit Alpha $ 40 38 25 33 30 33 $ 199 Beta $ 24 34 23 36 26 28 $ 171 The company considers its traceable fixed manufacturing overhead to be avoidable, whereas its common fixed expenses are unavoidable and have been allocated to products based on sales dollars. 14. Assume that Cane's customers would buy a maximum of 98,000 units of Alpha and 78,000 units of Beta. Also assume that the raw material available for production is limited to 248.000 pounds. What is the total contribution margin Cane Company will earn?

Cane Company manufactures two products called Alpha and Beta that sell for $210 and $172, respectively. Each product uses only one type of raw material that costs $8 per pound. The company has the capacity to annually produce 128,000 units of each product. Its average cost per unit for each product at this level of activity are given below: Direct materials Direct labor Variable manufacturing overhead Traceable fixed manufacturing overhead Variable selling expenses Connon fixed expenses Total cost per unit Alpha $ 40 38 25 33 30 33 $ 199 Beta $ 24 34 23 36 26 28 $ 171 The company considers its traceable fixed manufacturing overhead to be avoidable, whereas its common fixed expenses are unavoidable and have been allocated to products based on sales dollars. 14. Assume that Cane's customers would buy a maximum of 98,000 units of Alpha and 78,000 units of Beta. Also assume that the raw material available for production is limited to 248.000 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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