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Required information [The following information applies to the questions displayed below.] Cane Company manufactures two products called Alpha and Beta that sell for $210 and
Required information [The following information applies to the questions displayed below.] Cane Company manufactures two products called Alpha and Beta that sell for $210 and $172, respectively. Each product uses only one type of raw material that costs $8 per pound. The company has the capacity to annually produce 128,000 units of each product. Its average cost per unit for each product at this level of activity is given below: The company's traceable fixed manufacturing overhead is avoidable, whereas its common fixed expenses are unavoidable and have been allocated to products based on sales dollars. 8. Assume Cane normally produces and sells 78,000 Betas and 98,000 Alphas per year. If Cane discontinues the Beta product line, its sales representatives could increase sales of Alpha by 11,000 units. What is the financial advantage (disadvantage) of discontinuing the Beta product line? 9. Assume Cane expects to produce and sell 98,000 Alphas during the current year. A supplier offered to manufacture and deliver 98,000 Alphas to Cane for a price of $152 per unit. What is the financial advantage (disadvantage) of buying 98,000 units from the supplier instead of making those units? 10. Assume Cane expects to produce and sell 73,000 Alphas during the current year. A supplier offered to manufacture and deliver 73,000 Alphas to Cane for a price of $152 per unit. What is the financial advantage (disadvantage) of buying 73,000 units from the supplier instead of making those units? 11. How many pounds of raw material are needed to make one unit of each of the two products? 12. What contribution margin per pound of raw material is earned by each of the two products? Note: Round your answers to 2 decimal places. 13. Assume Cane's customers would buy a maximum of 98,000 units of Alpha and 78,000 units of Beta. Also assume the raw material available for production is limited to 248,000 pounds. How many units of each product should Cane produce to maximize its profits? 14. Assume Cane's customers would buy a maximum of 98,000 units of Alpha and 78,000 units of Beta. Also assume the raw material available for production is limited to 248,000 pounds. What is the total contribution margin Cane Company will earn? 15. Assume Cane's customers would buy a maximum of 98,000 units of Alpha and 78,000 units of Beta. Also assume the company's raw material available for production is limited to 248,000 pounds. If Cane uses its 248,000 pounds of raw materials, up to how much should it be willing to pay per pound for additional raw materials? Note: Round your answer to 2 decimal places
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