The following Information applies to the questions displayed below.j Cane Compan

Question

The following Information applies to the questions displayed below.j Cane Company manufactures two products called Alpha and Beta that sell for $185 and $120, respectively Each product uses only one type of raw materlal that costs $5 per pound. The company has the capacity to annually produce 112.000 units of each product. Its unit costs for each product at this level of activity are given below Direct materlals Direct labor Varlable manufacturing overhead Traceable fixed manufacturing overhead Varlable selling expenses Common fixed expenses Alpha Beta $30 $10 29 13 26 16 18 20 20 23 Total cost per unit $139$112 The company conslders its traceable fixed manufacturing overhead to be avoldable, whereas Its common fixed expenses are deemed unavoidable and have been allocated to products based on sales dollars. value

Explanation / Answer

(11) Pound of raw material

Pounds of raw material per unit = direct material / raw material per units   

Alpha   = $30 / $5 per pound = 6 pound

Beta   = $10 / $5 per pound =2 pound

(12) contribution per pound

aplha beta

sale $185 $120

less: direct material 30 10

   direct labour 22 29

Variable manufacture

   overhead 20 13

variable selling expense 20 16

   contribution per unit $93 $52

Alpha Beta

   Contribution per pound $93 /6 $52/2

=$15.5 per pound =$26 per pound

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