Question
Pole Company manufactures two products called Tap and Bounce that sell for $360 and $240, respectively. Each product uses only one type of raw material
Pole Company manufactures two products called Tap and Bounce that sell for $360 and $240, respectively. Each product uses only one type of raw material that costs $18 per pound. The company has the capacity to annually produce 300,000 units of each product. Its unit costs for each product at this level of activity are given below:
Tap Bounce
Direct materials. . . . . . . . . . . . . . . . . . . . . . . . . . . $ 90 $36
Direct labor. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60 45
Variable manufacturing overhead. . . . . . . . . . . . . 21 15
Traceable fixed manufacturing overhead. . . . . . . 48 54
Variable selling expenses. . . . . . . . . . . . . . . . . . . 36 24
Common fixed expenses. . . . . . . . . . . . . . . . . . . . 45 30
Total cost per unit. . . . . . . . . . . . . . . . . . . . . . . . . . $300 $204
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.
Required:
What contribution margin per pound of raw material is earned by Tap and Bounce?
please give step by step instructions or detailed explanation
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