Required information [The following information applies to the questions displayed below.] 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 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.
Required information [The following information applies to the questions displayed below.] 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 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.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
![Required information
[The following information applies to the questions displayed below.]
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
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.
Maximum price to be paid per pound
15. Assume Cane's customers would buy a maximum of 85,000 units of Alpha and 65,000 units of Beta. Also assume the company's
raw material available for production is limited to 166,000 pounds. If Cane uses its 166,000 pounds of raw materials, up to how much
should it be willing to pay per pound for additional raw materials?
Note: Round your answer to 2 decimal places.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Ffc92b7b5-b046-4082-955a-49bed0ec149c%2F180d23b4-840f-4fa5-b753-0ac53c086431%2Fmpmgeh_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 $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
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.
Maximum price to be paid per pound
15. Assume Cane's customers would buy a maximum of 85,000 units of Alpha and 65,000 units of Beta. Also assume the company's
raw material available for production is limited to 166,000 pounds. If Cane uses its 166,000 pounds of raw materials, up to how much
should it be willing to pay per pound for additional raw materials?
Note: Round your answer to 2 decimal places.
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