Question

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 unit costs for each product at this level of activity are given below: Alpha $ 30 Beta $ 12 20 6 Direct materials Direct labor Variable manufacturing overhead Traceable fixed manufacturing overhead Variable selling expenses Common fixed expenses 21 8 17 16 Total cost per unit $105 $ 77 Required: The company considers its traceable fixed manufacturing overhead to be avoidable, whereas its common fixed expenses are deemed unavoidable and have been allocated to products based on sales dollars. What is the company's total amount of common fixed expenses? Alpha Beta Common fixed expenses $ $

Answer 1

Calculate total amount of common fixed expenses

	Alpha	Beta
Common Fixed expenses	101000*16 = 1616000	101000*11 = 1111000