Cane Company manufactures two products called Alpha and Beta that sell for $155 and $115, respectively. Each product uses only one type of raw material that costs $6 per pound. The company has the capacity to annually produce 110,000 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 $ 24 23 22 23 19 22 $ 133 Financial advantage Beta $ 12 26 12 25 15 17 $ 107 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. Assume that Cane normally produces and sells 47,000 Betas per year. What is the financial advantage (disadvantage) of scontinuing the Beta product line?
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Cane Company manufactures two products called Alpha and Beta that sell for $155 and $115, respectively. Each product
uses only one type of raw material that costs $6 per pound. The company has the capacity to annually produce 110,000
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
$24
23
22
23
19
22
$ 133
Financial advantage
Beta
$ 12
26
12
25
15
17
$ 107
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 47,000 Betas per year. What is the financial advantage (disadvantage) of
discontinuing the Beta product line?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Feeeb5c16-fe6a-49c7-b97b-717b587cb63e%2F0014d690-ac25-4000-8855-98e954fbe9b3%2Fqv3gfvq_processed.png&w=3840&q=75)
![!
Required information
[The following information applies to the questions displayed below.]
Cane Company manufactures two products called Alpha and Beta that sell for $155 and $115, respectively. Each product
uses only one type of raw material that costs $6 per pound. The company has the capacity to annually produce 110,000
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
$ 24
23
Beta
$12
Total contribution margin
26
12
22
23
25
19
15
22
17
$ 133 $ 107
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.
14. Assume that Cane's customers would buy a maximum of 87,000 units of Alpha and 67,000 units of Beta. Also assume that the raw
material available for production is limited to 168,000 pound What is the total contribution margin Cane Company will earn?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Feeeb5c16-fe6a-49c7-b97b-717b587cb63e%2F0014d690-ac25-4000-8855-98e954fbe9b3%2Fa9bmv5g_processed.png&w=3840&q=75)
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Cane Company manufactures two products called Alpha and Beta that sell for $130 and $90, respectively. Each product uses only one type of raw material that costs $5 per pound. The company has the capacity to annually produce 102,000 units of each product. Its average cost per unit for each product at this level of activity are given below:
| Alpha | Beta | |
|---|---|---|
| Direct materials | $ 25 | $ 10 |
| Direct labor | 22 | 21 |
| Variable manufacturing |
17 | 7 |
| Traceable fixed manufacturing overhead | 18 | 20 |
| Variable selling expenses | 14 | 10 |
| Common fixed expenses | 17 | 12 |
| Total cost per unit | $ 113 | $ 80 |
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 82,000 Alphas during the current year. A supplier has offered to manufacture and deliver 82,000 Alphas to Cane for a price of $88 per unit. What is the financial advantage (disadvantage) of buying 82,000 units from the supplier instead of making those units?
by Bartleby Expert
Cane Company manufactures two products called Alpha and Beta that sell for $130 and $90, respectively. Each product uses only one type of raw material that costs $5 per pound. The company has the capacity to annually produce 102,000 units of each product. Its average cost per unit for each product at this level of activity are given below:
| Alpha | Beta | |
|---|---|---|
| Direct materials | $ 25 | $ 10 |
| Direct labor | 22 | 21 |
| Variable manufacturing |
17 | 7 |
| Traceable fixed manufacturing overhead | 18 | 20 |
| Variable selling expenses | 14 | 10 |
| Common fixed expenses | 17 | 12 |
| Total cost per unit | $ 113 | $ 80 |
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.
13. Assume that Cane’s customers would buy a maximum of 82,000 units of Alpha and 62,000 units of Beta. Also assume that the raw material available for production is limited to 162,000 pounds. How many units of each product should Cane produce to maximize its profits?
by Bartleby Expert
