5. Assume that Cane expects to produce and sell 113,000 Alphas during the current year. One of Cane's sales representatives has found a new customer who is willing to buy 28,000 additional Alphas for a price of $152 per unit; however pursuing this opportunity will decrease Alpha sales to regular customers by 13,000 units. What is the financial advantage (disadvantage) of accepting the new customer’s order? 7. Assume that Cane normally produces and sells 58,000 Betas per year. What is the financial advantage (disadvantage) of discontinuing the Beta product line? 8. Assume that Cane normally produces and sells 78,000 Betas and 98,000 Alphas per year. If Cane discontinues the Beta product line, its sales representatives could increase sales of Alpha by 11,000 units. What is the financial advantage (disadvantage) of discontinuing the Beta product line?
5. Assume that Cane expects to produce and sell 113,000 Alphas during the current year. One of Cane's sales representatives has found a new customer who is willing to buy 28,000 additional Alphas for a price of $152 per unit; however pursuing this opportunity will decrease Alpha sales to regular customers by 13,000 units. What is the financial advantage (disadvantage) of accepting the new customer’s order?
7. Assume that Cane normally produces and sells 58,000 Betas per year. What is the financial advantage (disadvantage) of discontinuing the Beta product line?
8. Assume that Cane normally produces and sells 78,000 Betas and 98,000 Alphas per year. If Cane discontinues the Beta product line, its sales representatives could increase sales of Alpha by 11,000 units. What is the financial advantage (disadvantage) of discontinuing the Beta product line?
9. Assume that Cane expects to produce and sell 98,000 Alphas during the current year. A supplier has offered to manufacture and deliver 98,000 Alphas to Cane for a price of $152 per unit. What is the financial advantage (disadvantage) of buying 98,000 units from the supplier instead of making those units?
![Cane Company manufactures two products called Alpha and Beta that sell for $210 and $172,
respectively. Each product uses only one type of raw material that costs $8 per pound. The
company has the capacity to annually produce 128,000 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
38
25
33
30
33
$199
Beta
$ 24
34
23
36
26
28
$171
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.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fa7ccfa45-6aae-48f9-b149-b7701b5f120a%2F7ab03c35-a28d-4ee2-ae73-662bbb08f0cc%2Fsyu2rsx_processed.png&w=3840&q=75)
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