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Cane Company manufactures two products called Alpha and Beta that sell for $150 and $110, respectively. Each product uses only one type of raw material

Cane Company manufactures two products called Alpha and Beta that sell for $150 and $110, respectively. Each product uses only one type of raw material that costs $5 per pound. The company has the capacity to annually produce 108,000 units of each product. Its average cost per unit for each product at this level of activity are given below:

Alpha Beta
Direct materials $ 30 $ 15
Direct labor 26 22
Variable manufacturing overhead 13 11
Traceable fixed manufacturing overhead 22 24
Variable selling expenses 18 14
Common fixed expenses 21 16
Total cost per unit $ 130 $ 102

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.

Foundational 13-15 (Algo)

15. Assume that Canes customers would buy a maximum of 86,000 units of Alpha and 66,000 units of Beta. Also assume that the companys raw material available for production is limited to 210,000 pounds. If Cane uses its 210,000 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.)

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