Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Cane Company manufactures two products called Alpha and Beta that sell for $225 and $175, respectively. Each product uses only one type of raw
Cane Company manufactures two products called Alpha and Beta that sell for $225 and $175, respectively. Each product uses only one type of raw material that costs $6 per pound. The company has the capacity to annually produce 130,000 units of each product. Its average cost per unit for each product at this level of activity is given below. Chea Alpha Beta Direct materials $42 $ 24 Direct labor 42 32 Variable manufacturing overhead 26 24 Traceable fixed manufacturing overhead 341 37 Variable selling expenses 31 27 Common fixed expenses 34 29 Total cost per unit $200 $173 The company's traceable fixed manufacturing overhead is avoidable, whereas its common fixed expenses are unavoidable and have been allocated to products based on sales dollars 14. Assume Cane's customers would buy a maximum of 99.000 units of Alpha and 79,000 units of Beta. Also assume the raw material available for production is limited to 344,000 pounds. What is the total contribution margin Cane Company will earn? Total contribution margin $ 222.000
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