Required information The Foundational 15 (Algo) (LO13-2, LO13-3, LO13-4, LO13-5, LO13-6) [The following information applies to the questions displayed below.] Cane Company manufactures two products called Alpha and Beta that sell for $185 and $150, respectively. Each product uses only one type of raw material that costs $8 per pound. The company has the capacity to annually produce 119,000 units of each product. Its average cost per unit for each product at this level of activity are given below: Direct materials Direct labor Variable manufacturing overhead Traceable fixed manufacturing overhead Variable selling expenses Common fixed expenses Total cost per unit Alpha $ 40 33 20 28 25 28 $174 Beta $ 24 28 18 31 21 23 $145 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. 6. Assume that Cane normally produces and sells 103,000 Betas per year. What is the financial advantage (disadvantage) of discontinuing the Beta product line? Financial (disadvantage) 9. Assume that Cane expects to produce and sell 93,000 Alphas during the current year. A supplier has offered to manufacture and deliver 93,000 Alphas to Cane for a price of $132 per unit. What is the financial advantage (disadvantage) of buying 93,000 units from the supplier instead of making those units? 10. Assume that Cane expects to produce and sell 68,000 Alphas during the current year. A supplier has offered to manufacture and deliver 68,000 Alphas to Cane for a price of $132 per unit. What is the financial advantage (disadvantage) of buying 68,000 units from the supplier instead of making those units? Financial advantage 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 93,000 units of Alpha and 73,000 units of Beta. Also assume that the raw material available for production is limited to 227,000 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 93,000 units of Alpha and 73,000 units of Beta. Also assume that the raw material available for production is limited to 227,000 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 93,000 units of Alpha and 73,000 units of Beta. Also assume that the company's raw material available for production is limited to 227,000 pounds. If Cane uses its 227,000 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
