- Required Information The Following Information Applies To The Questions Displayed Below Cane Company Manufactures Two 1 (68.55 KiB) Viewed 33 times
- Required Information The Following Information Applies To The Questions Displayed Below Cane Company Manufactures Two 2 (65.6 KiB) Viewed 33 times
- Required Information The Following Information Applies To The Questions Displayed Below Cane Company Manufactures Two 3 (65.89 KiB) Viewed 33 times
Required information [The following information applies to the questions displayed below] Cane Company manufactures two products called Alpha and Beta that sell for $175 and $135. respectively. Each product uses only one type of raw material that costs $5 per pound. The company has the capacity to annually produce 117,000 units of each product. Its average cost per unit for each product at this level of activity are given below. Direct materials Direct labor Variable manufacturing overhead Traceable fixed manufacturing overhead Variable selling expenses Common fixed expenses Total cost per unit Alpha $40 30 18 26 23 26 $163 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. Reg SA Beta $15. 30 16 29 19 21 $130 5. Assume that Cane expects to produce and sell 106,000 Alphas during the current year. One of Cane's sales representatives has found a new customer who is willing to buy 21,000 additional Alphas for a price of $124 per unit; however pursuing this opportunity will decrease Alpha sales to regular customers by 10,000 units. Reg 58 a. What is the financial advantage (disadvantage) of accepting the new customer's order? b. Based on your calculations above should the special order be accepted? Complete this question by entering your answers in the tabs below. What is the financial advantage (disadvantage) of accepting the new customer's order?
Required information [The following information applies to the questions displayed below.] Cane Company manufactures two products called Alpha and Beta that sell for $175 and $135, respectively. Each product uses only one type of raw material that costs $5 per pound. The company has the capacity to annually produce 117,000 units of each product. Its average cost per unit for each product at this level of activity are given below: Direct materials Direct labor Variable manufacturing overhead Traceable fixed manufacturing overhead Variable selling expenses Common fixed expenses Total cost per unit Alpha $ 40 30 18 26 23 26 $163 Beta $ 15 30 16 29 -19 21 $130 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. 6. Assume that Cane normally produces and sells 101,000 Betas per year. What is the financial advantage (disadvantage) of discontinuing the Beta product line?