Required information

[The following information applies to the questions A-D displayed below.]

Cane Company manufactures two products called Alpha and Beta that sell for $140 and $100, respectively. Each product uses only one type of raw material that costs $8 per pound. The company has the capacity to annually produce 106,000 units of each product. Its average cost per unit for each product at this level of activity are given below:

	Alpha				Beta
Direct materials		$	32			$	16
Direct labor			24				19
Variable manufacturing overhead			10				9
Traceable fixed manufacturing overhead			20				22
Variable selling expenses			16				12
Common fixed expenses			19				14
Total cost per unit		$	121			$	92

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.

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

pounds of raw material per unit ALPHA____ BETA_____________

B). Assume that Canes customers would buy a maximum of 84,000 units of Alpha and 64,000 units of Beta. Also assume that the raw material available for production is limited to 166,000 pounds. How many units of each product should Cane produce to maximize its profits?

Units Produced ALPHA______ Units Produced BETA______

C). Assume that Canes customers would buy a maximum of 84,000 units of Alpha and 64,000 units of Beta. Also assume that the raw material available for production is limited to 166,000 pounds. What total contribution margin will it earn?

Total contribution margin_________

D). Assume that Canes customers would buy a maximum of 84,000 units of Alpha and 64,000 units of Beta. Also assume that the raw material available for production is limited to 166,000 pounds. If Cane uses its 166,000 pounds of raw materials, up to how much should it be willing to pay per pound for additional raw materials? (Round your answer to 2 decimal places.)

Maximum price to be paid per pound__________