Alpha Beta

Direct materials $ $40$ $ $24$

Direct labor $2925$

Variable manufacturing overhead $1514$

Traceable fixed manufacturing overhead $2527$

Variable selling expenses $2117$

Common fixed expenses $2419$

Total cost per unit $ $154$ $ $126$

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.

$7.$ Assume that Cane normally produces and sells $49,000$ Betas per year. What is the financial advantage $($disadvantage$)$ of discontinuing the Beta product line?

$8.$ Assume that Cane normally produces and sells $69,000$ Betas and $89,000$ Alphas per year. If Cane discontinues the Beta product line, its sales representatives could increase sales of Alpha by $13,000$ units. What is the financial advantage $($disadvantage$)$ of discontinuing the Beta product line?Cane Company manufactures two products called Alpha and Beta that sell for $$165$ and $$130,$ respectively. Each product uses only one type of raw material that costs $$8$ per pound. The company has the capacity to annually produce $113,000$ units of each product. Its average cost per unit for each product at this level of activity are given below:

$12.$ What contribution margin per pound of raw material is earned by each of the two products?

$13.$ Assume that Cane$$s customers would buy a maximum of $89,000$ units of Alpha and $69,000$ units of Beta. Also assume that the raw material available for production is limited to $220,000$ pounds. How many units of each product should Cane produce to maximize its profits?

$14.$ Assume that Cane$$s customers would buy a maximum of $89,000$ units of Alpha and $69,000$ units of Beta. Also assume that the raw material available for production is limited to $220,000$ pounds. What is the total contribution margin Cane Company will earn?

$15.$ Assume that Cane$$s customers would buy a maximum of $89,000$ units of Alpha and $69,000$ units of Beta. Also assume that the company$$s raw material available for production is limited to $220,000$ pounds. If Cane uses its $220,000$ pounds of raw materials, up to how much should it be willing to pay per pound for additional raw materials?