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Cane Company manufactures two products called Alpha and Beta that sell for $195 and $150, respectively. Each product uses only one type of raw material
Cane Company manufactures two products called Alpha and Beta that sell for $195 and $150, respectively. Each product uses only one type of raw material that costs $5 per pound. The company has the capacity to annually produce 123,000 units 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 22 30 Beta $ 15 28 20 33 23 25 $144 27 30 $183 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. 13. Assume that Cane's customers would buy a maximum of 95,000 units of Alpha and 75,000 units of Beta. Also assume th material available for production is limited to 245,000 pounds. How many units of each product should Cane produce to ma profits? Alpha Beta Units produced 9
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