Cane Company manufactures two products called Alpha and Beta that sell for $185 and $120, respectively.Each product uses only one type of raw material that costs $5 per pound. The company has the capacity toannually produce 112,000 units of each product. Its average cost per unit for each product at this level ofactivity are given below:Alpha Beta$ 30$ 10Direct materialsDirect labor22Variable manufacturing overhead 20Traceable fixed manufacturing overhead 24Variable selling expenses20Common fixed expenses23Total cost per unit$ 139 $ 112The company considers its traceable fixed manufacturing overhead to be avoidable, whereas its commonfixed expenses are unavoidable and have been allocated to products based on sales dollars.291326161814. Assume that Cane's customers would buy a maximum of 88,000 units of Alpha and 68,000 units ofBeta. Also assume that the raw material available for production is limited to 172,000 pounds. What is thetotal contribution margin Cane Company will earn?

Name: Cane Company manufactures two products called Alpha and Beta that sel
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Description: Cane Company manufactures two products called Alpha and Beta that sell for $185 and $120, respectively.Each product uses only one type of raw material that costs $5 per pound. The company has the capacity toannually produce 112,000 units of each pro

To calculate the total contribution cane company will earn , when raw material availalbity is…

Answered: materials labor =turing overhead Alpha…

Business

Accounting

materials labor =turing overhead Alpha $30 22 20 ufacturing overhead 31 Beta $ 10 29 13 26

Principles of Accounting Volume 2

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Chapter6: Activity-based, Variable, And Absorption Costing

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Concept explainers

Variance Analysis

In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.

Standard Costing

The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.

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Question

Cane Company manufactures two products called Alpha and Beta that sell for $185 and $120, respectively.
Each product uses only one type of raw material that costs $5 per pound. The company has the capacity to
annually produce 112,000 units of each product. Its average cost per unit for each product at this level of
activity are given below:
Alpha Beta
$ 30
$ 10
Direct materials
Direct labor
22
Variable manufacturing overhead 20
Traceable fixed manufacturing overhead 24
Variable selling expenses
20
Common fixed expenses
23
Total cost per unit
$ 139 $ 112
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.
29
13
26
16
18
14. Assume that Cane's customers would buy a maximum of 88,000 units of Alpha and 68,000 units of
Beta. Also assume that the raw material available for production is limited to 172,000 pounds. What is the
total contribution margin Cane Company will earn?

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