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

Answer:

Total Traceable F. MOH  alpha   $ 3186000   beta        $ 3540000

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