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: 1. What is the total amount of traceable fixed manufacturing overhead for each of the two products

Answer 1

Total Traceable F. MOH alpha $ 3186000 beta $ 3540000

Step-by-step explanation:

Cane Company

Alpha Beta

Sale Price 180 145

Units 118000 118000

Direct materials $ 36 $ 24

Direct labor 32 27

Variable Mfg OH 19 17

Traceable F.MOH 27 30

Var. selling expenses 24 20

Common F. Exp 27 22

Total cost per unit $ 165 $ 140

The number of units is multiplied with the unit cost of traceable fixed manufacturing overhead to get the total traceable fixed manufacturing overheads for the two products.

Alpha Beta

Traceable F.MOH 27 30

Units 118000 118000

Total Traceable F. MOH 3186000 3540000