Question

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

Answer 1

11)
	Alpha	Beta
Pounds of raw materials per unit ($30/$5); ($15/$5)	6	3
13)
First calculate which product gives more profit:	Alpha	Beta
Selling price per unit	$150	$110
Less: Variable costs per unit:
Direct materials per unit	($30)	($15)
Direct labor per unit	($26)	($22)
Variable manufacturing overheads per unit	($13)	($11)
Variable selling expenses per unit	($18)	($14)
Contribution margin per unit	$63	$48
Pounds of raw materials reqquired per unit in pounds	6	3
Contribution margin per pound of materials ($63/$6); ($48/$3)	$10.50	$16.00
Rank as per the contribution margin per pound	2	1
Considering the limited pounds of raw materials, which product has highest rank that product will be produced first and then the second rank product
So -
all units will be given for Beta	66,000
For Alpha, (210,000 pounds - [66,000 units * 3 pounds] = 12,000 pounds/6 pounds per unit)	2,000
Therefore -
	Alpha	Beta
Units produced	2,000	66,000
14)	Alpha	Beta	Total
Contribution margin per unit (a)	$63	$48
Total units produced (b)	2,000	66,000
Contribution Margin	$126,000	$3,168,000	$3,294,000
Therefore, total contribution margin is $3,294,000.
15)
As per the current situation, the total demand of Beta can be met but for Alpha, total 2,000 units only can be produced so the additional materials are required for Aplha only
	Alpha
Cost of raw materials per pound	$5
Add: Contribution margin per pound	$10.50
Maximum price to be paid per pound	$15.50