Question

Assume that Cane’s customers would buy a maximum of 83,000 units of Alpha and 63,000 units of Beta. Also assume that the raw material available for production is limited to 200,000 pounds. If Cane uses its 200,000 pounds of raw materials, up to how much should it be willing to pay per pound for additional raw materials?

A) 1.52
B) 2.53
C) 3.04
D) 4.05

Answer 1

Without specific data on the contribution margin of Alpha and Beta products, it is impossible to calculate the maximum price per pound that Cane should pay for additional raw materials.

Step-by-step explanation:

The student's question involves determining the maximum price per pound for additional raw materials that Cane should be willing to pay, given certain constraints on production and materials. Unfortunately, the question does not provide enough context or relevant data, such as the contribution margin per unit of Alpha and Beta products, production ratios, or any other data that we could use to calculate the maximum price per pound. Without this crucial information, it is not possible to calculate a precise answer to this question.

We would need to know how much revenue each product generates per pound of raw material and the cost associated with producing each. This would allow us to find the contribution margin, which is needed to calculate the maximum price Cane should pay for additional raw materials. The examples and data provided about fish and sugar prices in Brazil are not directly applicable to solving this business problem.