uses only one type of raw material that costs $6 per pound. The company has the capacity to annually produce 130,000 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 $ 42 42 26 34 31 34 $ 209 Beta $ 24 32 24 37 27 29 $ 173 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.
uses only one type of raw material that costs $6 per pound. The company has the capacity to annually produce 130,000 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 $ 42 42 26 34 31 34 $ 209 Beta $ 24 32 24 37 27 29 $ 173 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
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![Required Information
[The following information applies to the questions displayed below.]
Cane Company manufactures two products called Alpha and Beta that sell for $225 and $175, respectively. Each product
uses only one type of raw material that costs $6 per pound. The company has the capacity to annually produce 130,000
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
$ 42
42
26
34
31
34
$ 209
Maximum price to be paid per pound
Beta
$ 24
32
24
37
27
29
$ 173
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.
15. Assume Cane's customers would buy a maximum of 99,000 units of Alpha and 79,000 units of Beta. Also assume the company's
raw material available for production is limited to 344.000 pounds. If Cane uses its 344,000 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%2Fc41d9b89-db2e-473a-aeb5-f61e32500722%2F7a02c251-d3a4-45f9-b4b9-92f669c7dfce%2Fz6e60ia_processed.png&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 $225 and $175, respectively. Each product
uses only one type of raw material that costs $6 per pound. The company has the capacity to annually produce 130,000
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
$ 42
42
26
34
31
34
$ 209
Maximum price to be paid per pound
Beta
$ 24
32
24
37
27
29
$ 173
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.
15. Assume Cane's customers would buy a maximum of 99,000 units of Alpha and 79,000 units of Beta. Also assume the company's
raw material available for production is limited to 344.000 pounds. If Cane uses its 344,000 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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