! Required information [The following information applies to the questions displayed below.] Cane Company manufactures two products called Alpha and Beta that sell for $205 and $164, respectively. Each product uses only one type of raw material that costs $8 per pound. The company has the capacity to annually produce 127,000 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 37 24 32 29 32 $194 Beta $ 24 30 Total contribution margin 22 35 25 27 $163 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 97,000 units of Alpha and 77,000 units of Beta. Also assume that the company's raw material available for production is limited to 247,000 pounds. What is the maximum contribution margin Cane Company can earn given the limited quantity of raw materials?
! Required information [The following information applies to the questions displayed below.] Cane Company manufactures two products called Alpha and Beta that sell for $205 and $164, respectively. Each product uses only one type of raw material that costs $8 per pound. The company has the capacity to annually produce 127,000 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 37 24 32 29 32 $194 Beta $ 24 30 Total contribution margin 22 35 25 27 $163 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 97,000 units of Alpha and 77,000 units of Beta. Also assume that the company's raw material available for production is limited to 247,000 pounds. What is the maximum contribution margin Cane Company can earn given the limited quantity of raw materials?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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 $205 and $164, respectively. Each product
uses only one type of raw material that costs $8 per pound. The company has the capacity to annually produce 127,000
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
37
24
32
29
32
$194
Beta
$ 24
30
Total contribution margin
22
35
25
27
$163
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 97,000 units of Alpha and 77,000 units of Beta. Also assume that the
company's raw material available for production is limited to 247,000 pounds. What is the maximum contribution margin Cane
Company can earn given the limited quantity of raw materials?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F51b4ab29-3653-40ff-a46e-b9e24f415c52%2F2e799194-24e6-4cfd-b8cd-ffd44178bdd5%2F60d8bra_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 $205 and $164, respectively. Each product
uses only one type of raw material that costs $8 per pound. The company has the capacity to annually produce 127,000
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
37
24
32
29
32
$194
Beta
$ 24
30
Total contribution margin
22
35
25
27
$163
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 97,000 units of Alpha and 77,000 units of Beta. Also assume that the
company's raw material available for production is limited to 247,000 pounds. What is the maximum contribution margin Cane
Company can earn given the limited quantity of raw materials?
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