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 Variable manufacturing overhead Traceable fixed manufacturing overhead Variable selling expenses Common fixed expenses 20 15 5 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. 6. Assume that Cane normally produces and sells 90,000 Betas per year. What is the financial advantage (disadvantage) of discontinuing the Beta product line?

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 Variable manufacturing overhead Traceable fixed manufacturing overhead Variable selling expenses Common fixed expenses 20 15 5 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. 6. Assume that Cane normally produces and sells 90,000 Betas per year. What is the financial advantage (disadvantage) of discontinuing the Beta product line?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Dinesh Bhai
[The following information applies to the questions displayed below.] Cane Company manufactures two products called Alpha and Beta that sell for $140 and $100, respectively. Each product uses only one type of raw material that costs $8 per pound. The company has the capacity to annually produce 106,000 units of each product. Its average cost per unit for each product at this level of activity is given below: Direct materials Direct labor Variable manufacturing overhead Traceable fixed manufacturing overhead Variable selling expenses Common fixed expenses Total cost per unit Alpha Beta $ 32 $ 16 24 19 10 20 22 16 12 19 14 $ 121 $ 92 The company's traceable fixed manufacturing overhead is avoidable, whereas its common fixed expenses are unavoidable and have been allocated to products based on sales dollars. Assume Cane normally produces and sells 44,000 Betas per year. What is the financial dvantage (disadvantage) of discontinuing the Beta product line?
Meman
Please help me with show all calculation thanku
! Required information [The following information applies to the questions displayed below.] Cane Company manufactures two products called Alpha and Beta that sell for $190 and $155, respectively. Each product uses only one type of raw material that costs $8 per pound. The company has the capacity to annually produce 122,000 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 34 21 29 26 29 $ 179 Beta Maximum price to be paid per pound $24 28 19 32 22 24 $ 149 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. 15. Assume that Cane's customers would buy a maximum of 94,000 units of Alpha and 74,000 units of Beta.…
Meman
Cane Company manufactures two products called Alpha and Beta that sell for $190 and $155, respectively. Each product uses only one type of raw material that costs $8 per pound. The company has the capacity to annually produce 122,000 units of each product. Its average cost per unit for each product at this level of activity is given below: Alpha Beta Direct materials $ 40 $ 24 Direct labor 34 28 Variable manufacturing overhead 21 19 Traceable fixed manufacturing overhead 29 32 Variable selling expenses 26 22 Common fixed expenses 29 24 Total cost per unit $ 179 $ 149 The company’s traceable fixed manufacturing overhead is avoidable, whereas its common fixed expenses are unavoidable and have been allocated to products based on sales dollars. 15. Assume Cane’s customers would buy a maximum of 94,000 units of Alpha and 74,000 units of Beta. Also assume the company’s raw material available for production is limited to 228,000 pounds. If Cane uses its 228,000…
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. Maximum price to be paid per pound 15. Assume that Cane's customers would buy a maximum of 91,000 units of Alpha and 71,000 units of Beta. Also assume that the company's raw material available for production is limited to 225,000…
Kubin Company's relevant range of production is 15,000 to 19,000 units. When it produces and sells 17,000 units, its average costs per unit are as follows: Amount per Unit $ 7.60 $ 4.60 $ 2.10 $ 5.60 $ 4.10 $ 3.10 $ 1.60 $ 1.10 Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Fixed selling expense Fixed administrative expense Sales commissions Variable administrative expense Required: 1. If 15,000 units are produced and sold, what is the variable cost per unit produced and sold? 2. If 19,000 units are produced and sold, what is the variable cost per unit produced and sold? 3. If 15,000 units are produced and sold, what is the total amount of variable cost related to the units produced and sold? 4. If 19,000 units are produced and sold, what is the total amount of variable cost related to the units produced and sold? 5. If 15,000 units are produced, what is the average fixed manufacturing cost per unit produced? 6. If 19,000 units are produced,…
Cane Company manufactures two products called Alpha and Beta that sell for $185 and $120, respectively. Each product uses only one type of raw material that costs $5 per pound. The company has the capacity to annually produce 112,000 units of each product. Its average cost per unit for each product at this level of activity are given below: Alpha Beta $ 30 $ 10 Direct materials Direct labor 22 Variable manufacturing overhead 20 Traceable fixed manufacturing overhead 24 Variable selling expenses 20 Common fixed expenses 23 Total cost per unit $ 139 $ 112 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. 29 13 26 16 18 14. Assume that Cane's customers would buy a maximum of 88,000 units of Alpha and 68,000 units of Beta. Also assume that the raw material available for production is limited to 172,000 pounds. What is the total contribution margin…
! Required information [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 is given below: Direct materials. Direct labor Variable manufacturing overhead Traceable fixed manufacturing overhead Variable selling expenses Common fixed expenses Total cost per unit Alpha $ 35 Pounds of raw materials per unit 48 27 35 Alpha 32 35 $ 212 The company's traceable fixed manufacturing overhead is avoidable, whereas its common fixed expenses are unavoidable and have been allocated to products based on sales dollars. Betal $ 15 23 11. How many pounds of raw material are needed to make one unit of each of the two products? 25 38 28 30 $ 159 Beta
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: Direct materials Alpha $ 30 Beta $ 12 Direct labor 20 15 Variable manufacturing overhead 7 5 Traceable fixed manufacturing overhead 16 18 Variable selling expenses 12 8 Common fixed expenses 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. 6. Assume that Cane normally produces and sells 90,000 Betas per year. What is the financial advantage (disadvantage) of discontinuing the Beta product line?