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Cane Company manufactures two products called Alpha and Beta that sell for $170 and $130, respectively. Each product uses only one type of raw material that costs $6 per pound. The company has the capacity to annually produce 116,000 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	30	25
Variable manufacturing overhead	20	15
Traceable fixed manufacturing overhead	26	28
Variable selling expenses	22	18
Common fixed expenses	25	20
Total cost per unit	$ 153	$ 124

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.

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

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

Assume that Canes customers would buy a maximum of 90,000 units of Alpha and 70,000 units of Beta. Also assume that the raw material available for production is limited to 221,000 pounds. How many units of each product should Cane produce to maximize its profits?

Assume that Canes customers would buy a maximum of 90,000 units of Alpha and 70,000 units of Beta. Also assume that the raw material available for production is limited to 221,000 pounds. What is the total contribution margin Cane Company will earn?

Assume that Canes customers would buy a maximum of 90,000 units of Alpha and 70,000 units of Beta. Also assume that the companys raw material available for production is limited to 221,000 pounds. If Cane uses its 221,000 pounds of raw materials, up to how much should it be willing to pay per pound for additional raw materials?