Answered step by step
Verified Expert Solution
Question
1 Approved Answer
#1.Cane Company manufactures two products called Alpha and Beta that sell for $215 and $160, respectively. Each product uses only one type of raw material
#1.Cane Company manufactures two products called Alpha and Beta that sell for $215 and $160, respectively. Each product uses only one type of raw material that costs $7 per pound. The company has the capacity to annually produce 125,000 units of each product. Its unit costs for each product at this level of activity are given below: |
Alpha | Beta | |||||||
Direct materials | $ | 42 | $ | 21 | ||||
Direct labor | 35 | 28 | ||||||
Variable manufacturing overhead | 23 | 21 | ||||||
Traceable fixed manufacturing overhead | 31 | 34 | ||||||
Variable selling expenses | 28 | 24 | ||||||
Common fixed expenses | 31 | 26 | ||||||
Total cost per unit | $ | 190 | $ | 154 | ||||
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. |
Required: |
What contribution margin per pound of raw material is earned by Alpha and Beta? (Round your answers to 2 decimal places.) |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started