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[The following information applies to the questions displayed below] A company produces two products. Product 1 sells for $155 and Product 2 sells for $115.

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[The following information applies to the questions displayed below] A company produces two products. Product 1 sells for $155 and Product 2 sells for $115. Each product uses only one type of raw material that costs $6 per pound. The company has the capacity to annually produce 110,000 units of each product. Its average cost per unit for each product at this level of activity are given below: Product 1 Proguct Direct materials :5 24 $ 12 Direct labor 23 26 Variable manufacturing overhead 22 12 Traceable fixed manufacturing overhead 23 25 Variable selling expenses 19 15 Common fixed expenses 22 17 Total cost per unit $133 $107 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. Consider each ofthe following questions separately. 7. The company's customers will buy a maximum of 87,000 units of Product 1 and 67,000 units of Product 2. lfthere are only 168,000 pounds of raw material available for production, how many units of each product should be produced to maximize profits? 8 Answer is complete but not entirely correct. Units produced 67,000 0 3,500 9

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