Required information The Foundational 15 (Algo) [LO11-2, LO11-3, LO11-4, LO11-5, L011-6) (The following information applies to the questions displayed below.) Cane Company manufactures two products called Alpha and Beta that sell for $125 and $85, respectively. Each product uses only one type of raw material that costs $6 per pound. The company has the capacity to annually produce 101,000 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 $ 12 Direct labor 21 20 Variable manufacturing overhead 8 6 Traceable fixed manufacturing over head 17 19 Variable selling expenses 13 9 Common fixed expenses 16 11 Total cost per unit $ 105 $ 72 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. Foundational 11-6 (Algo) 6. Assume that Cane normally produces and sells 91,000 Betas per year. What is the financial advantage (disadvantage) of discontinuing the Beta product line? 7. Assume that Cane normally produces and sells 41,000 Betas per year. What is the financial advantage (disadvantage) of discontinuing the Beta product line? 8. Assume that Cane normally produces and sells 61,000 Betas and 81,000 Alphas per year. If Cane discontinues the Beta product line, its sales representatives could increase sales of Alpha by 16,000 units. What is the financial advantage (disadvantage) of discontinuing the Beta product line? cos 9. Assume that Cane expects to produce and sell 81,000 Alphas during the current year. A supplier has offered to manufacture and deliver 81000 Alphas to Cane for a price of $84 per unit. What is the financial advantage (disadvantage) of buying 81,000 units from the supplier instead of making those units? 10. Assume that Cane expects to produce and sell 51,000 Alphas during the current year. A supplier has offered to manufacture and deliver 51,000 Alphas to Cane for a price of $84 per unit. What is the financial advantage (disadvantage) of buying 51,000 units from the supplier instead of making those units? cos 11. How many pounds of raw material are needed to make one unit of each of the two products? Alpha Beta Pounds of raw materials per unit 12. What contribution margin per pound of raw material is earned by each of the two products? (Round your answers to 2 decimal places.) Alpha Beta Contribution margin per pound 13. Assume that Cane's customers would buy a maximum of 81,000 units of Alpha and 61,000 units of Beta. Also assume that the raw material available for production is limited to 161,000 pounds. How many units of each product should Cane produce to maximize its profits? Alpha Beta Units produced 14. Assume that Cane's customers would buy a maximum of 81,000 units of Alpha and 61,000 units of Beta. Also assume that the raw material available for production is limited to 161,000 pounds. What is the total contribution margin Cane Company will earn? Total contribution margin 15. Assume that Cane's customers would buy a maximum of 81,000 units of Alpha and 61,000 units of Beto. Also assume that the company's raw material available for production is limited to 161,000 pounds. If Cane uses its 161,000 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
