Required information

Skip to question

$[$The following information applies to the questions displayed below.$]$

Cane Company manufactures two products called Alpha and Beta that sell for $$175$ and $$135,$ respectively. Each product uses only one type of raw material that costs $$5$ per pound. The company has the capacity to annually produce $117,000$ units of each product. Its average cost per unit for each product at this level of activity are given below:

Alpha Beta

Direct materials $ $40$ $ $15$

Direct labor $3030$

Variable manufacturing overhead $1816$

Traceable fixed manufacturing overhead $2629$

Variable selling expenses $2319$

Common fixed expenses $2621$

Total cost per unit $ $163$ $ $130$

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.

$13.$ Assume that Cane$$s customers would buy a maximum of $91,000$ units of Alpha and $71,000$ units of Beta. Also assume that the raw material available for production is limited to $225,000$ pounds. How many units of each product should Cane produce to maximize its profits?