Required information[The following information applies to the questions displayed below.]Cane Company manufactures two products called Alpha and Beta that sell for $195 and $150, respectively. Each productuses only one type of raw material that costs $5 per pound. The company has the capacity to annually produce 123,000units of each product. Its average cost per unit for each product at this level of activity are given below:Alpha$ 40BetaDirect materials$ 15Direct labor3428Variable manufacturing overheadTraceable fixed manufacturing overheadVariable selling expenses222030332723Common fixed expenses3025Total cost per unit$183$ 144The company considers its traceable fixed manufacturing overhead to be avoidable, whereas its common fixed expensesare unavoidable and have been allocated to products based on sales dollars.3. Assume that Cane expects to produce and sell 95,000 Alphas during the current year. One of Cane's sales representatives hasfound a new customer who is willing to buy 25,000 additional Alphas for a price of $140 per unit. What is the financial advantage(disadvantage) of accepting the new customer's order?

3. Alpha Per unit ($) Per unit ($) Sales 140 Less: Variable costs Direct…

Required information [The following information applies to the questions displayed below.] Cane Company manufactures two products called Alpha and Beta that sell for $195 and $150, respectively. Each product uses only one type of raw material that costs $5 per pound. The company has the capacity to annually produce 123,000 units of each product. Its average cost per unit for each product at this level of activity are given below: Alpha $ 40 Beta Direct materials $ 15 Direct labor Variable manufacturing overhead Traceable fixed manufacturing overhead Variable selling expenses Common fixed expenses 34 28 22 20 30 33 27 23 30 25 Total cost per unit $ 183 $ 144 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. 3. Assume that Cane expects to produce and sell 95,000 Alphas during the current year. One of Cane's sales representatives has found a new customer who is willing to buy 25,000 additional Alphas for a price of $140 per unit. 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 $195 and $150, respectively. Each product uses only one type of raw material that costs $5 per pound. The company has the capacity to annually produce 123,000 units of each product. Its average cost per unit for each product at this level of activity are given below: Alpha $ 40 Beta Direct materials $ 15 Direct labor Variable manufacturing overhead Traceable fixed manufacturing overhead Variable selling expenses Common fixed expenses 34 28 22 20 30 33 27 23 30 25 Total cost per unit $ 183 $ 144 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. 3. Assume that Cane expects to produce and sell 95,000 Alphas during the current year. One of Cane's sales representatives has found a new customer who is willing to buy 25,000 additional Alphas for a price of $140 per unit. What is the financial advantage (disadvantage) of accepting the new customer's order?

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter2: Building Blocks Of Managerial Accounting

Section: Chapter Questions

Problem 5EA: Rose Company has a relevant range of production between 10,000 and 25.000 units. The following cost...

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Required information [The following information applies to the questions displayed below.] Cane Company manufactures two products called Alpha and Beta that sell for $120 and $80, respectively. Each product uses only one type of raw material that costs $6 per pound. The company has the capacity to annually produce 100,000 units of each product. Its average cost per unit for each product at this level of activity are given below: Alpha $ 30 Beta Direct materials $ 12 Direct labor 20 15 Variable manufacturing overhead Traceable fixed manufacturing overhead Variable selling expenses Common fixed expenses 16 18 12 15 10 Total cost per unit $ 100 $ 68 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. 7. Assume that Cane normally produces and sells 40,000 Betas per year. What is the financial advantage (disadvantage) of discontinuing the Beta product…
Required information [The following information applies to the questions displayed below.] Cane Company manufactures two products called Alpha and Beta that sell for $120 and $80, respectively. Each product uses only one type of raw material that costs $6 per pound. The company has the capacity to annually produce 100,000 units of each product. Its average cost per unit for each product at this level of activity are given below: Alpha $ 30 Beta Direct materials $12 Direct labor 20 15 Variable manufacturing overhead Traceable fixed manufacturing overhead Variable selling expenses Common fixed expenses 15 16 18 12 8 15 10 Total cost per unit $ 100 $ 68 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. 9. Assume that Cane expects to produce and sell 80,000 Alphas during the current year. A supplier has offered to manufacture and deliver 80,000…
[The following information applies to the questions displayed below.] Cane Company manufactures two products called Alpha and Beta that sell for $240 and $162, respectively. Each product uses only one type of raw material that costs $5 per pound. The company has the capacity to annually produce 131,000 units of each product. Its average cost per unit for each product at this level of activity are given below: Alpha Beta Direct materials $ 35 $ 15 Direct labor 48 23 Variable manufacturing overhead 27 25 Traceable fixed manufacturing overhead 35 38 Variable selling expenses 32 28 Common fixed expenses 35 30 Total cost per unit $ 212 $ 159 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. 3. Assume that Cane expects to produce and sell…
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