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Cane Company manufactures two products called Alpha and Beta that sell for $185 and $150, respectively. Each product uses only one type of raw material that costs $8 per pound. The company has the capacity to annually produce 119,000 units of each product. Its unit costs for each product at this level of activity are given below: Alpha Beta 40 24 Direct materials Direct labor 33 28 Variable manufacturing overhead 18 Traceable fixed manufacturing overhead 28 31 Variable selling expenses 21 Common fixed expenses 28 23 $174 $145 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 Required: Assume that Cane's customers would buy a maximum of 93,000 units of Alpha and 73,000 units of Beta. Also assume that the company's raw material available for production is limited to 227,000 pounds. How many units of each product should Cane produce to maximize its profits? Alpha Beta Units Produced
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