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Cane Company manufactures two products called Alpha and Beta that sell for $135 and $95, respectively. Each product uses only one type of raw material

Cane Company manufactures two products called Alpha and Beta that sell for $135 and $95, respectively. Each product uses only one type of raw material that costs $6 per pound. The company has the capacity to annually produce 105,000 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 $ 18
Direct labor 23 16
Variable manufacturing overhead 10 8
Traceable fixed manufacturing overhead 19 21
Variable selling expenses 15 11
Common fixed expenses 18 13
Total cost per unit $ 115 $ 87

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.

14. Assume that Canes customers would buy a maximum of 83,000 units of Alpha and 63,000 units of Beta. Also assume that the raw material available for production is limited to 200,000 pounds. What total contribution margin will it earn?

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