Required information. The Foundational 15 (Algo) (LO13-2, LO13-3, LO13-4, LO13-5, LO13-6] [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 Units produced Alpha $ 30 25 Alpha 12 21 17 20 $ 125 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. Beta Beta $ 10 20 Foundational 13-13 (Algo) 13. Assume Cane's customers would buy a maximum of 85,000 units of Alpha and 65,000 units of Beta. Also assume the raw material available for production is limited to 166,000 pounds. How many units of each product should Cane produce to maximize its profits? 10 23 13 15 $ 91
Required information. The Foundational 15 (Algo) (LO13-2, LO13-3, LO13-4, LO13-5, LO13-6] [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 Units produced Alpha $ 30 25 Alpha 12 21 17 20 $ 125 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. Beta Beta $ 10 20 Foundational 13-13 (Algo) 13. Assume Cane's customers would buy a maximum of 85,000 units of Alpha and 65,000 units of Beta. Also assume the raw material available for production is limited to 166,000 pounds. How many units of each product should Cane produce to maximize its profits? 10 23 13 15 $ 91
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Required information.
The Foundational 15 (Algo) (LO13-2, LO13-3, LO13-4, LO13-5, LO13-6)
[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
Units produced.
Alpha
$ 30
25
Alpha
12
21
17
20
$ 125
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.
Beta
Beta
$10
Foundational 13-13 (Algo)
13. Assume Cane's customers would buy a maximum of 85,000 units of Alpha and 65,000 units of Beta. Also assume the raw material
available for production is limited to 166,000 pounds. How many units of each product should Cane produce to maximize its profits?
20
10
23
13
15
$91
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