Cane Company manufactures two products called Alpha and Betathat sell for $125 and $85, respectively. Each product uses onlyone type of raw material that costs $6 per pound. The company hasthe capacity to annually produce 101,000 units of each product. Itsunit costs for each product at this level of activity are givenbelow: Alpha Beta Direct materials $ 30 $ 12 Direct labor 21 20Variable manufacturing overhead 8 6 Traceable fixed manufacturingoverhead 17 19 Variable selling expenses 13 9 Common fixed expenses16 11 Total cost per unit $ 105 $ 77 The company considers itstraceable fixed manufacturing overhead to be avoidable, whereas itscommon fixed expenses are deemed unavoidable and have beenallocated to products based on sales dollars. Required: Assume thatCane’s customers would buy a maximum of 81,000 units of Alpha and61,000 units of Beta. Also assume that the company’s raw materialavailable for production is limited to 161,000 pounds. What is themaximum contribution margin Cane Company can earn given the limitedquantity of raw materials? What is the Total Contribution Margin?$
