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Cane Company manufactures two products called Alpha and Beta that sell for $ 1 5 0 and $ 1 0 5 , respectively. Each product
Cane Company manufactures two products called Alpha and Beta that sell for $ and $ respectively. Each product uses only one type of raw material that costs $ per pound. The company has the capacity to annually produce units of each product. Its average cost per unit for each product at this level of activity is given below
The companys traceable fixed manufacturing overhead is avoidable, whereas its common fixed expenses are unavoidable and have been allocated to products based on sales dollars.
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Assume Cane expects to produce and sell Alphas during the current year. A supplier offered to manufacture and deliver Alphas to Cane for a price of $ per unit. What is the financial advantage disadvantage of buying units from the supplier instead of making those units?
How many pounds of raw material are needed to make one unit of each of the two products?
What contribution margin per pound of raw material is earned by each of the two products?
Note: Round your answers to decimal places.
Assume Canes customers would buy a maximum of units of Alpha and units of Beta. Also assume the raw material available for production is limited to pounds. How many units of each product should Cane produce to maximize its profits?
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