In: Accounting
Cane Company manufactures two products called Alpha and Beta that sell for $155 and $115, respectively. Each product uses only one type of raw material that costs $6 per pound. The company has the capacity to annually produce 110,000 units of each product. Its average cost per unit for each product at this level of activity are given below:
Alpha | Beta | |||||||
Direct materials | $ | 24 | $ | 12 | ||||
Direct labor | 23 | 26 | ||||||
Variable manufacturing overhead | 22 | 12 | ||||||
Traceable fixed manufacturing overhead | 23 | 25 | ||||||
Variable selling expenses | 19 | 15 | ||||||
Common fixed expenses | 22 | 17 | ||||||
Total cost per unit | $ | 133 | $ | 107 | ||||
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.
11. How many pounds of raw material are needed to make one unit of each of the two products?
12. What contribution margin per pound of raw material is earned by each of the two products? (Round your answers to 2 decimal places.)