Question
Cane Company manufactures two products called Alpha and Beta that sell for $150 and $105, respectively. Each product uses only one type of raw material
Cane Company manufactures two products called Alpha and Beta that sell for $150 and $105, respectively. Each product uses only one type of raw material that costs $5 per pound. The company has the capacity to annually produce 107,000 units of each product. Its unit costs for each product at this level of activity are given below:
Alpha | Beta | ||||||||||||
Direct materials | $ | 30 | $ | 10 | |||||||||
Direct labor | 25 | 20 | |||||||||||
Variable manufacturing overhead | 12 | 10 | |||||||||||
Traceable fixed manufacturing overhead | 21 | 23 | |||||||||||
Variable selling expenses | 17 | 13 | |||||||||||
Common fixed expenses | 20 | 15 | |||||||||||
Total cost per unit | $ | 125 | $ | 91 | |||||||||
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