***Please use Excel***

1. How many pounds of raw material are needed to make one unit of each of the two products?

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

3. Assume that Stars customers would buy a maximum of 80,000 units of Alpha and 60,000 units of Beta. Also assume that the raw material available for production is limited to 160,000 pounds. How many units of each product should Star produce to maximize its profits?

4. If Star follows your recommendation in requirement 3, what total contribution margin will it earn?

5. If Star uses its 160,000 pounds of raw materials as you recommended in requirement 3, up to how much should it be willing to pay per pound for additional raw materials?

Star Inc. produces two products called Alpha and Beta that sell for $108.00 and $72.00 respectively. Each product uses only one type of raw material that costs $6 per pound. The company has the capacity to annually produce 100,000 units of each product. Its average cost per unit for each product at this level of activity is given below: Alpha Beta 30 12 18 14 8 6 Direct material Direct labor Variable overhead Traceable fixed cost Variable selling expenses Commom fixed expenses 10 12 10 10 12 8 The company considers its traceable fixed manufac uring overhead to be avoidable, whereas its common fixed expenses are unavoidable and have been allocated to products based on sales dollars