1. Assume that Canes customers would buy a maximum of 94,000 units of Alpha and 74,000 units of Beta. Also assume that the companys raw material available for production is limited to 228,000 pounds.

a. How many units of each product should Cane produce to maximize its profits?

b. What is the maximum contribution margin Cane Company can earn given the limited quantity of raw materials?

c. If Cane uses its 228,000 pounds of raw materials, up to how much should it be willing to pay per pound for additional raw materials?

Cane Company manufactures two products called Alpha and Beta that sel for $190 and $155, respectively. Each product uses only one type of raw material that costs $8 per pound. The company has the capacity to annually produce 122,000 units of each product. Its average cost per unit for each product at this level of activity are given below: Direct materials Direct labor Variable manufacturing overhead Traceable fixed manufacturing overhead Variable selling expenses Common fixed expenses Total cost per unit $ 40 34 21 29 26 29 $179 Beta 24 28 19 32 24 $149 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