Question

Required information The following information applies to the questions displayed below.] Cane Company manufactures two products called Alpha and Beta that sell for $150 and $105, respectively. Each product uses only one type of raw material that costs $5 per pound. The company has the capacity to annually produce 107,000 units of each product. Its average cost per unit for each product at this level of activity are given below: Alpha Direct materials Direct labor Variable manufacturing overhead Traceable fixed manufacturing overhead Variable selling expenses Common fixed expenses Total cost per unit $ 30 25 12 21 17 20 $125 Beta $10 20 10 23 13 $91 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 11. How many pounds of raw material are needed to make one unit of each of the two products? Beta Pounds of raw materials per unit

Answer 1

Partculars	Alpha	Beta
Direct material cost per unit	30	10
Raw material cost per pound	5$	5$
Number of pounds per unit	6	2

Statement showing contribution per pound of raw material

Partculars	Alpha	Beta
Selling price	150	105
- veriable cost	(84)	(44)
Contribution margin per unit	66	61
Number of pounds per unit	6	2
Contribution margin per pound	11	30.5

15) maximum price to be paid per pound

Regular Direct material cost + contribution foregone

i.e 5+11=16$

Answer 2