Cane Company manufactures two products called Alpha and Beta that sell for $190 and $155, respectively. Each product uses only one type of raw material that costs $8 per pound. The company has the capacity to annually produce 122,000 units of each product. Its unit costs for each product at this level of activity are given below: Alpha Beta Direct materials $ 40 $ 24 Direct labor 34 28 Variable manufacturing overhead 21 19 Traceable fixed manufacturing overhead 29 32 Variable selling expenses 26 22 Common fixed expenses 29 24 Total cost per unit $ 179 $ 149 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.
How many pounds of raw material are needed to make one unit of Alpha and one unit of Beta?
What contribution margin per pound of raw material is earned by Alpha and Beta? (Round your answers to 2 decimal places.)
Assume that Cane’s customers would buy a maximum of 94,000 units of Alpha and 74,000 units of Beta. Also assume that the company’s raw material available for production is limited to 228,000 pounds. How many units of each product should Cane produce to maximize its profits?
Assume that Cane’s customers would buy a maximum of 94,000 units of Alpha and 74,000 units of Beta. Also assume that the company’s raw material available for production is limited to 228,000 pounds. What is the maximum contribution margin Cane Company can earn given the limited quantity of raw materials?
Assume that Cane’s customers would buy a maximum of 94,000 units of Alpha and 74,000 units of Beta. Also assume that the company’s raw material available for production is limited to 228,000 pounds. Up to how much should it be willing to pay per pound for additional raw materials? (Round your answer to 2 decimal places.)