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Question - Cane Company manufactures two products called Alpha and Beta that sell for $180 and $145, respectively. Each product uses only one type of raw material that costs $6 per pound. The company has the capacity to annually produce 118,000 units of each product. Its average cost per unit for each product at this level of activity are given below:
Alpha Beta
Direct materials $36 $24
Direct labor 32 27
Variable manufacturing overhead 19 17
Traceable fixed manufacturing overhead 27 30
Variable selling expenses 24 20
Common fixed expenses 27 22
Total cost per unit $165 $140
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.
Required - How many pounds of raw material are needed to make one unit of each of the two products?
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