Cane Company manufactures two products called Alpha and Beta that sell for $150 and $105, respectively. Each product uses only one type of raw material that costs $5 per pound. The company has the capacity to annually produce 107,000 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 $ 10 Direct labor 25 20 Variable manufacturing overhead 12 10 Traceable fixed manufacturing overhead 21 23 Variable selling expenses 17 13 Common fixed expenses 20 15 Total cost per unit $ 125 $ 91

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.

12. What contribution margin per pound of raw material is earned by each of the two products?

13. Assume that Canes customers would buy a maximum of 85,000 units of Alpha and 65,000 units of Beta. Also assume that the raw material available for production is limited to 166,000 pounds. How many units of each product should Cane produce to maximize its profits?

14. Assume that Canes customers would buy a maximum of 85,000 units of Alpha and 65,000 units of Beta. Also assume that the raw material available for production is limited to 166,000 pounds. What is the total contribution margin Cane Company will earn?

15. Assume that Canes customers would buy a maximum of 85,000 units of Alpha and 65,000 units of Beta. Also assume that the companys raw material available for production is limited to 166,000 pounds. If Cane uses its 166,000 pounds of raw materials, up to how much should it be willing to pay per pound for additional raw materials?