Cane Company manufactures two products called Alpha and Beta that sell 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 unts 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 Alpha $40 34 21 29 26 29 $ 179 Beta $ 24 28 19 32 22 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. 8. Assume that Cone normally produces and sells 74.000 Betas and 94,000 Alphas per year. If Cane discontinues the Beta product Tine, Its sales representatives could increase sales of Alpha by 14,000 units. What is the financial advantage (disadvantage) of discontinuing the Beta product line? 9. Assume that Cane expects to produce and sell 94,000 Alphas during the current year. A supplier has offered to manufacture and deliver 94.000 Alphas to Cane for a price of $136 per unit. What is the financial advantage (disadvantage) of buying 94,000 units from the supplier instead of making those units? ho. Assume that Cone expects to produce and sell 69,000 Alphos during the current year. A supplier has offered to manufacture and deliver 69,000 Alphas to Cone for a price of $136 per unit. What is the financial advantage (disadvantage) of buying 69,000 units from the supplier instead of making those units? 11. How many pounds of raw material are needed to make one unit of each of the two products? Alpha Beta Pounds of raw materials per unit 5 3 12. What contribution margin per pound of raw material is earned by each of the two products? (Round your answers to 2 decima places.) Alpha Beta Contribution margin per pound 13. Assume that Cane's customers would buy a maximum of 94,000 units of Alpha and 74,000 units of Beto. Also assume that the raw material available for production is limited to 228.000 pounds. How many units of each product should Cone produce to maximize its profits Alpha Beta Units produced 14. Assume that Cone's customers would buy a maximum of 94,000 units of Alpha and 74,000 units of Beta Also assume that the row material available for production is limited to 228,000 pounds. What is the total contribution margin Cane Company will earn Total contribution margin 15. Assume that Cone's customers would buy a moximum of 94,000 units of Alpha and 74,000 units of Beto. Also assume that the company's raw material available for production is limited to 228.000 pounds. 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? (Round your answer to 2 decimal places.) Maximum price to be paid per pound
