Cane Company manufactures two products called Alpha and Beta that sell for $125 and $85, respectively. Each productuses only one type of raw material that costs $6 per pound. The company has the capacity to annually produce 101,000units of each product. Its average cost per unit for each product at this level of activity are given below:Direct materialsDirect laborVariable manufacturing overheadTraceable fixed manufacturing overheadVariable selling expensesCommon fixed expensesTotal cost per unitAlpha$ 30Beta$ 1221208617191391611$ 105$ 77The 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.9. Assume that Cane expects to produce and sell 81,000 Alphas during the current year. A supplier has offered to manufacture anddeliver 81,000 Alphas to Cane for a price of $84 per unit. What is the financial advantage (disadvantage) of buying 81,000 units fromthe supplier instead of making those units?Answer is complete but not entirely correct.Financial (disadvantage)972,000

Let's break down the costs and compare:In-house manufacturing cost per unit for Alpha:Direct…

Answered: Cane Company manufactures two products…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Urmilaben
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