Optional Extra Credit KoQuestions 2-16 (of 26) The following information applies

Question

Optional Extra Credit KoQuestions 2-16 (of 26) The following information applies to the questions dispiayed below Cane Company manufactures two products called Alpha and Beta that sell for $210 and $172, respectively Each product uses only one type of raw material that costs $8 per pound. The company has the capacity to annually produce 128.000 units of each product. Its unit costs for each product at this level of activity are given below Direct materials Direct labor Vanable manufacturing overhead Traceable fixed manufacturing overhead Variable selling expenses Common fixed expenses AlphaBeta $ 40 $24 34 25 23 33 36 30 26 33 28 38 Total cost per unit $199 $171 The company considers its traceable fixed manufacturing overhead to be avoicdable whereas ts common ftxed expenses are deemed unavoidable and have been allocated to products based on sales doliors

Explanation / Answer

Computation of CM per Pound of Direct Material

Particulars

Alpha

Beta

Sales

210

172

Direct material---A

40

24

Direct labor

38

34

Variable manufacturing cost

25

23

CM per Unit ----B

107

91

Direct Material Cost per Pound-C

8

8

Direct Material in Pound—D=A/C

5

3

CM per pound of Direct Material------B/D

                     21.40

                 30.33

Rank

II

I

                               

Computation of Optimum Production

Units of FG

Pounds of Raw Material

Availability of Direct Material in Pounds

             248,000

Less: Raw Material required for 78,000 units of Beta

                   78,000

78,000 x 3

          (234,000)

Raw Material available for Alfa

                     2,800

               14,000

14,000/5

             (14,000)

Statement showing Total Contribution

Particulars

Alpha

Beta

Total

CM per Unit

107.00

91.00

Sales in units

                   78,000

                 2,800

                         80,800

Total Contribution

       8,346,000.00

       254,800.00

                   8,600,800

Computation of CM per Pound of Direct Material

Particulars

Alpha

Beta

Sales

210

172

Direct material---A

40

24

Direct labor

38

34

Variable manufacturing cost

25

23

CM per Unit ----B

107

91

Direct Material Cost per Pound-C

8

8

Direct Material in Pound—D=A/C

5

3

CM per pound of Direct Material------B/D

                     21.40

                 30.33

Rank

II

I

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