Cane Company manufactures two products called Alpha and Beta that sell for $205
ID: 2481723 • Letter: C
Question
Cane Company manufactures two products called Alpha and Beta that sell for $205 and $164, respectively. Each product uses only one type of raw material that costs $8 per pound. The company has the capacity to annually produce 127,000 units of each product. Its unit costs for each product at this level of activity are given below:
Assume that Cane expects to produce and sell 72,000 Alphas during the current year. A supplier has offered to manufacture and deliver 72,000 Alphas to Cane for a price of $148 per unit. If Cane buys 72,000 units from the supplier instead of making those units, how much will profits increase or decrease?
What contribution margin per pound of raw material is earned by Alpha and Beta?
Assume that Cane’s customers would buy a maximum of 97,000 units of Alpha and 77,000 units of Beta. Also assume that the company’s raw material available for production is limited to 247,000 pounds. How many units of each product should Cane produce to maximize its profits?
15. Assume that Cane’s customers would buy a maximum of 97,000 units of Alpha and 77,000 units of Beta. Also assume that the company’s raw material available for production is limited to 247,000 pounds. Up to how much should it be willing to pay per pound for additional raw materials?
Assume that Cane’s customers would buy a maximum of 97,000 units of Alpha and 77,000 units of Beta. Also assume that the company’s raw material available for production is limited to 247,000 pounds. What is the maximum contribution margin Cane Company can earn given the limited quantity of raw materials?
10.Assume that Cane expects to produce and sell 72,000 Alphas during the current year. A supplier has offered to manufacture and deliver 72,000 Alphas to Cane for a price of $148 per unit. If Cane buys 72,000 units from the supplier instead of making those units, how much will profits increase or decrease?
Cane Company manufactures two products called Alpha and Beta that sell for $205 and $164, respectively. Each product uses only one type of raw material that costs $8 per pound. The company has the capacity to annually produce 127,000 units of each product. Its unit costs for each product at this level of activity are given below: Alpha Beta $40$24 30 Direct materials Direct labor Variable manufacturing overhead Traceable fixed manufacturing overhead Variable selling expenses Common fixed expenses 37 24 32 29 32 35 25 27 $194 $163 Total cost per unit 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.Explanation / Answer
Alpha Beta Sales price per unit 205.00 164.00 Alpha Beta Direct materials 40.00 24.00 Direct Material cost 40.00 24.00 Direct labor 37.00 30.00 Cost per pound 8.00 8.00 Variable manufacturing overhead 24.00 22.00 Qty required to make per unit 5.00 3.00 Traceable fixed manufacturing overhead 32.00 35.00 Variable selling expenses 29.00 25.00 16.80 Common fixed expenses (Sunk Cost) - - 5.00 84.00 Total cost per unit 162.00 136.00 Contribution margin per unit 43.00 28.00 Qty required to make per unit 5.00 3.00 Contribution margin raw material 8.60 9.33 Co. will make Beta first and alpha after this Capacity Rquired per unit Material Available 247,000.00 pounds A 127,000.00 5.00 635,000.00 Beta requirement per unit 3.00 pounds B 127,000.00 3.00 381,000.00 Required for maximum production 82,333.33 1,016,000.00 Maximum sales 77,000.00 Required Material for Beta 231,000.00 77000*3 Material Available for Alpha 16,000.00 247000-231000 Planned production-Alpha 3,200.00 16000/5 Alpha Units Cost In house cost 72,000.00 162.00 Vendor offer 72,000.00 148.00 Profit incease/(decrease) 72,000.00 14.00 1,008,000.00