The Foundational 15 (Algo) [LO13-2, LO13-3, LO13-4, LO13-5, LO13-6] Cane Company manufactures two products called Alpha and Beta that sell for $140 and $100, respectively. Each product uses only one type of raw material that costs $8 per pound. The company has the capacity to annually produce 106,000 units of each product. Its average cost per unit for each product at this level of activity are given below: Alpha Beta Direct materials $ 32 $ 16 Direct labor 24 19 Variable manufacturing overhead 10 9 Traceable fixed manufacturing overhead 20 22 Variable selling expenses 16 12 Common fixed expenses 19 14 Total cost per unit $ 121 $ 92 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. 12. What contribution margin per pound of raw material is earned by each of the two products? (Round your answers to 2 decimal places.) Contribution Margin Per Pound of Raw Material for Alpha: Contribution Margin Per Pound of Raw Material for Beta:
The Foundational 15 (Algo) [LO13-2, LO13-3, LO13-4, LO13-5, LO13-6] Cane Company manufactures two products called Alpha and Beta that sell for $140 and $100, respectively. Each product uses only one type of raw material that costs $8 per pound. The company has the capacity to annually produce 106,000 units of each product. Its average cost per unit for each product at this level of activity are given below: Alpha Beta Direct materials $ 32 $ 16 Direct labor 24 19 Variable manufacturing overhead 10 9 Traceable fixed manufacturing overhead 20 22 Variable selling expenses 16 12 Common fixed expenses 19 14 Total cost per unit $ 121 $ 92 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. 12. What contribution margin per pound of raw material is earned by each of the two products? (Round your answers to 2 decimal places.) Contribution Margin Per Pound of Raw Material for Alpha: Contribution Margin Per Pound of Raw Material for Beta:
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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The Foundational 15 (Algo) [LO13-2, LO13-3, LO13-4, LO13-5, LO13-6]
Cane Company manufactures two products called Alpha and Beta that sell for $140 and $100, respectively. Each product uses only one type of raw material that costs $8 per pound. The company has the capacity to annually produce 106,000 units of each product. Its average cost per unit for each product at this level of activity are given below:
| Alpha | Beta | |
|---|---|---|
| Direct materials | $ 32 | $ 16 |
| Direct labor | 24 | 19 |
| Variable manufacturing |
10 | 9 |
| Traceable fixed manufacturing overhead | 20 | 22 |
| Variable selling expenses | 16 | 12 |
| Common fixed expenses | 19 | 14 |
| Total cost per unit | $ 121 | $ 92 |
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.
12. What contribution margin per pound of raw material is earned by each of the two products? (Round your answers to 2 decimal places.)
Contribution Margin Per Pound of Raw Material for Alpha:
Contribution Margin Per Pound of Raw Material for Beta:
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