[The following information applies to the questions displayed below.] Cane Company manufactures two products called Alph
Posted: Tue Jul 05, 2022 11:47 am
[The following information applies to the questions displayedbelow.]
Cane Company manufactures two products called Alpha and Betathat sell for $185 and $120, respectively. Each product uses onlyone type of raw material that costs $5 per pound. The company hasthe capacity to annually produce 112,000 units of each product. Itsaverage cost per unit for each product at this level of activityare given below:
AlphaBeta
Direct materials $30 $10
Direct labor 22 29
Variable manufacturingoverhead 20 13
Traceable fixed manufacturingoverhead 24 26
Variable sellingexpenses 20 16
Common fixedexpenses 23 18
Total cost per unit $139 $112
The company considers its traceable fixed manufacturing overheadto be avoidable, whereas its common fixed expenses are unavoidableand have been allocated to products based on sales dollars.
9. Assume that Cane expects to produce and sell 88,000 Alphasduring the current year. A supplier has offered to manufacture anddeliver 88,000 Alphas to Cane for a price of $112 per unit. What isthe financial advantage (disadvantage) of buying 88,000 units fromthe supplier instead of making those units?
- Assume that Cane expects to produce and sell 58,000Alphas during the current year. A supplier has offered tomanufacture and deliver 58,000 Alphas to Cane for a price of $112per unit. What is the financial advantage (disadvantage) of buying58,000 units from the supplier instead of making those units?
-How many pounds of raw material are needed to make one unit ofeach of the two products( alpha& beta)
Cane Company manufactures two products called Alpha and Betathat sell for $185 and $120, respectively. Each product uses onlyone type of raw material that costs $5 per pound. The company hasthe capacity to annually produce 112,000 units of each product. Itsaverage cost per unit for each product at this level of activityare given below:
AlphaBeta
Direct materials $30 $10
Direct labor 22 29
Variable manufacturingoverhead 20 13
Traceable fixed manufacturingoverhead 24 26
Variable sellingexpenses 20 16
Common fixedexpenses 23 18
Total cost per unit $139 $112
The company considers its traceable fixed manufacturing overheadto be avoidable, whereas its common fixed expenses are unavoidableand have been allocated to products based on sales dollars.
9. Assume that Cane expects to produce and sell 88,000 Alphasduring the current year. A supplier has offered to manufacture anddeliver 88,000 Alphas to Cane for a price of $112 per unit. What isthe financial advantage (disadvantage) of buying 88,000 units fromthe supplier instead of making those units?
- Assume that Cane expects to produce and sell 58,000Alphas during the current year. A supplier has offered tomanufacture and deliver 58,000 Alphas to Cane for a price of $112per unit. What is the financial advantage (disadvantage) of buying58,000 units from the supplier instead of making those units?
-How many pounds of raw material are needed to make one unit ofeach of the two products( alpha& beta)