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Cane Company manufactures two products called Alpha and Beta that sell for $240 and $162, respectively. Each product uses only one type of raw material

Cane Company manufactures two products called Alpha and Beta that sell for $240 and $162, respectively. Each product uses only one type of raw material that costs $5 per pound. The company has the capacity to annually produce 131,000 units of each product. Its unit costs for each product at this level of activity are given below:

Alpha Beta
Direct materials $ 35 $ 15
Direct labor 48 23
Variable manufacturing overhead 27 25
Traceable fixed manufacturing overhead 35 38
Variable selling expenses 32 28
Common fixed expenses 35 30
Total cost per unit $ 212 $ 159

The company considers its traceable fixed manufacturing overhead to be avoidable, whereas its common fixed expenses are deemed unavoidable and have been allocated to products based on sales dollars.

9. Assume that Cane expects to produce and sell 100,000 Alphas during the current year. A supplier has offered to manufacture and deliver 100,000 Alphas to Cane for a price of $160 per unit. If Cane buys 100,000 units from the supplier instead of making those units, how much will profits increase or decrease?

Profit: increase/decreases by ______________

10. Assume that Cane expects to produce and sell 75,000 Alphas during the current year. A supplier has offered to manufacture and deliver 75,000 Alphas to Cane for a price of $160 per unit. If Cane buys 75,000 units from the supplier instead of making those units, how much will profits increase or decrease?

Profit: increase/decreases by ______________

11. How many pounds of raw material are needed to make one unit of Alpha and one unit of Beta?

Pounds of raw material per unit: Alpha:_____________ Beta:_______________

12. What contribution margin per pound of raw material is earned by Alpha and Beta? (Round your answers to 2 decimal places.)

Contribution margin per pound: Alpha:____________ Beta:__________________

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