Question
Cane Company manufactures two products called Alpha and Beta that sell for $120 and $80, respectively. Each product uses only one type of raw material
Cane Company manufactures two products called Alpha and Beta that sell for $120 and $80, respectively. Each product uses only one type of raw material that costs $6 per pound. The company has the capacity to annually produce 100,000 units of each product. Its unit costs for each product at this level of activity are given below:
Alpha | Beta | |
Direct Materials | $30 | $12 |
Direct Labor | 20 | 15 |
Variable manufacturing overhead | 7 | 5 |
Traceable fixed manufacturing overhead | 16 | 18 |
Variable selling expenses | 12 | 8 |
Common Fixed expenses | 15 | 10 |
Total | $100 | $68 |
11- How many pounds of raw material are needed to make one unit of Alpha and one unit of Beta?
12- What contribution margin per pound of raw material is earned by Alpha and Beta?
13- Assume that Canes customers would buy a maximum of 80,000 units of Alpha and 60,000 units of Beta. Also assume that the companys raw material available for production is limited to 160,000 pounds. How many units of each product should Cane produce to maximize its profits?
14- Assume that Canes customers would buy a maximum of 80,000 units of Alpha and 60,000 units of Beta. Also assume that the companys raw material available for production is limited to 160,000 pounds. What is the maximum contribution margin Cane Company can earn given the limited quantity of raw materials?
15- Assume that Canes customers would buy a maximum of 80,000 units of Alpha and 60,000 units of Beta. Also assume that the companys raw material available for production is limited to 160,000 pounds. What is the maximum contribution margin Cane Company can earn given the limited quantity of raw materials?
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