Required information The Foundational 15 [LO12-2, LO12-3, LO12-4, LO12-5, L012-6

Question

Required information The Foundational 15 [LO12-2, LO12-3, LO12-4, LO12-5, L012-6] The following information applies to the questions displayed below.] Cane Company manufactures two products called Alpha and Beta that sell for $170 and $130, respectively. Each product uses only one type of raw material that costs $6 per pound. The company has the capacity to annually produce 116,000 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 30 20 26 Beta s 18 25 15 28 18 20 25 $153 $124 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

Explanation / Answer

solution 11 pounds of raw material alpha beta material cost per unit 30 18 material cost per pound 6 6 pound per unit 5 3 12 Contribution alpha beta sale price 170 130 Less: materiAL 30 18 LABOUR 30 25 VARIABLE OH 20 15 VARIABLE SELLING COST 22 18 CONTRIBUTION 68 54 13 QUANTITY REQUIRED TO produce full qty of maximum sales particulars alfha (90000*5) 450000 beta (70000*3) 210000 toatl required 660000 but available is 221000 pounds Since contribution of alfha is more this whole quantity of raw material will be used for alpha to produce 221000/5   i.e 44200 units of alpha 14 Maximum contribution total units of alpha produced* contribution per unit. 44200*68 3005600

Related Questions

Navigate

• Browse (All)
• Browse R
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.