Chec × Ashley Cezto.mheducation.com/hm.tpx?-=0.3967218686745263-1 5 1 1 97806436
ID: 2583162 • Letter: C
Question
Chec × Ashley Cezto.mheducation.com/hm.tpx?-=0.3967218686745263-1 5 1 1 978064366 Required information 1.00 points 13. Assume that Cane's customers would buy a maximum of 80,000 units of Alpha and 60,000 units of Beta. Also assume that the company's raw material available for production is limited to 160,000 pounds. How many units of each product should Cane produce to maximize its profits? Alpha Beta Units produced Required Informati orn [The following information appWes to the questions displayed below Cane Company manufactures two products called Alpha and Beta that sell for $120 and $80, respectively. Each product uses only one type of raw material that costs $6 per pound. The company has the capacity to annually produce 100,000 units of each product. Its unit costs for each product at this level of activity are given below: References eBook &Resources; Worksheet Learning Objective: 12-03 Prepare a make or buy analysis. Learning Objective: 12-04 Prepare an analysis showing whether a special order should be accepted. Alpha $ 30 20 Beta $ 12 15 Difficulty: 2 Medium Direct materials Direct labor Variable manufacturing overhead Traceable fixed manufacturing overhead Variable selling expenses Common fixed expenses Learning Objective: 12-02 Prepare an analysis showing whether a product line or other business segment should be added or dropped. 16 12 15 18 Learning Objective: 12-05 Determine the most profitable use of a constrained 10 Total cost per unit $100 $ 68 WOExplanation / Answer
Answer:-
1)-
2)-
No. of units to be produced:-
Alpha = 8000 units
Beta = 60000 units
Where:-
Raw material cost =$6 per pound
Direct Material cost per unit (Alpha) =$30 per unit
Pounds of raw material are needed to make one unit of Alpha:-
= Direct Material cost per unit (Alpha)/ Raw material cost per pound
=$30 per unit/$6 per pound =5 pounds
Pounds of raw material are needed to make one unit of Beta:-
= Direct Material cost per unit (Beta)/ Raw material cost per pound
=$12 per unit/$6 per pound = 2pounds
Alpha Beta
Pounds of raw material per unit 5 2
Statement of Ranking Products Alpha Beta $ $ Selling Price per Unit 120 80 Less:- Variable cost per unit Direct Materials 30 12 Direct Labor 20 15 Variable manufaturing overhead 7 5 Variable selling expenses 12 8 Contribution per unit 51 40 Pounds of Raw material per unit 5 2 Contribution per pound of raw material 10.2 20 Ranking II I