Question

Cane Company manufactures two products called Alpha and Beta that sell for $225 and $175, respectively. Each product uses only one type of raw material that costs $6 per pound. The company has the capacity to annually produce 130,000 units of each product. Its average cost per unit for each product at this level of activity are given below: Beta Alpha $ 42 $ 24 26 Direct materials Direct labor Variable manufacturing overhead Traceable fixed manufacturing overhead Variable selling expenses Common fixed expenses Total cost per unit im $209 $173 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. Required: Constrained Resources - Most Profitable Use Decision What contribution margin per pound of raw material is earned by each of the two products? (Round your answers to 2 decimal places.)

Answer 1

sales price per unit СЗ А E F 1 Alpha $225 2 Beta $175 sales price per unit direct materials per unit 3 $42 $24 4 direct labor per unit variable manufacturing overhead per unit variable selling expenses per unit contribution margin per unit raw material requirement per unit (pounds) contribution margin per pound of raw material $42 $32 5 $26 $24 6 $31 $27 7 $84 $68 7 4 12.00 $17.00 10 11 .. co. st LO LON

for formulas and calculations, refer to the image below -

sales price per unit СЗ C А D E F 1 Alpha 2 Beta sales price per unit 225 175 direct materials per unit 42 24 direct labor per unit 42 5 32 variable manufacturing overhead per unit variable selling expenses per unit contribution margin per unit raw material requirement per unit (pounds) D4/6 =contribution margin per pound of raw materialD8/D9 26 24 6 27 31 -D3-D4-D5-D6-D7E3-E4-E5-E6-E7 -E4/6 8 -E8/E9 10 11 LL m t LO LO NO0

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