Cane Company manufactures two products called Alpha and Beta that sell for $185

Question

Cane Company manufactures two products called Alpha and Beta that sell for $185 and $120, respectively Each product uses only one type of raw material that costs $5 per pound. The company has the capacity to annually produce 112,000 units of each product. Its unit costs for each product at this level of activity are given below Direct materials Direct labor Variable manufacturing overhead Traceable fixed manufacturing overhead Variable selling expenses Common fixed expenses Alpha Beta $30$10 29 13 26 16 18 20 24 20 23 Total cost per unit $139 $112 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

Explanation / Answer

1) Product Traceable fixed manufacturing overheads Budgeted Units Total Amount of traceable fixed manufacturing overhead Alpha 24 112000 2688000 Beta 26 112000 2912000 2) Product Common fixed expense Alpha 23 112000.00 2576000 Beta 18 112000 2016000 Total Common fixed expense 4592000

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