Cane Company manufactures two products called Alpha and Beta that sell for $185 and $120, respectively. Each prod uses only one type of raw material that costs $5 per pound. The company has the capacity to annually produce 112,00 units of each product. Its unit costs for each product at this level of activity are given below: Profit Direct materials Direct labour Variable manufacturing overhead Traceable fixed manufacturing overhead Variable selling expenses Common fixed expenses Cost per unit Alpha $30 22 20 24 20 23 $139 by Beta $10 29 13 26 16 18 $112 The company considers its traceable fixed manufacturing overhead to be avoidable, whereas its common fixed expens are deemed unavoidable and have been allocated to products based on sales dollars. 9. Assume that Cane expects to produce and sell 88,000 Alphas during the current year. A supplier has offered to manufactur deliver 88,000 Alphas to Cane for a price of $112 per unit. If Cane buys 88,000 units from the supplier instead of making those how much will profits increase or decrease?
Cane Company manufactures two products called Alpha and Beta that sell for $185 and $120, respectively. Each prod uses only one type of raw material that costs $5 per pound. The company has the capacity to annually produce 112,00 units of each product. Its unit costs for each product at this level of activity are given below: Profit Direct materials Direct labour Variable manufacturing overhead Traceable fixed manufacturing overhead Variable selling expenses Common fixed expenses Cost per unit Alpha $30 22 20 24 20 23 $139 by Beta $10 29 13 26 16 18 $112 The company considers its traceable fixed manufacturing overhead to be avoidable, whereas its common fixed expens are deemed unavoidable and have been allocated to products based on sales dollars. 9. Assume that Cane expects to produce and sell 88,000 Alphas during the current year. A supplier has offered to manufactur deliver 88,000 Alphas to Cane for a price of $112 per unit. If Cane buys 88,000 units from the supplier instead of making those how much will profits increase or decrease?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![[The following information applies to the questions displayed below.]
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 unit costs for each product at this level of activity are given below:
Profit
Direct materials
Direct labour
Variable manufacturing overhead
Traceable fixed manufacturing overhead
Variable selling expenses
Common fixed expenses
Cost per unit
Alpha
$30
22
20
24
20
23
$139
by
Beta
$10
29
13
26
16
18
$112
The company considers its traceable fixed manufacturing overhead to be avoidable, whereas its common fixed expenses
are deemed unavoidable and have been allocated to products based on sales dollars.
9. Assume that Cane expects to produce and sell 88,000 Alphas during the current year. A supplier has offered to manufacture and
deliver 88,000 Alphas to Cane for a price of $112 per unit. If Cane buys 88,000 units from the supplier instead of making those units,
how much will profits increase or decrease?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fd787d608-0474-4f9d-9444-27945e129970%2F8b5c77e5-91bf-46c3-8bf7-786b769cd84e%2Fakn68ht_processed.jpeg&w=3840&q=75)
Transcribed Image Text:[The following information applies to the questions displayed below.]
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 unit costs for each product at this level of activity are given below:
Profit
Direct materials
Direct labour
Variable manufacturing overhead
Traceable fixed manufacturing overhead
Variable selling expenses
Common fixed expenses
Cost per unit
Alpha
$30
22
20
24
20
23
$139
by
Beta
$10
29
13
26
16
18
$112
The company considers its traceable fixed manufacturing overhead to be avoidable, whereas its common fixed expenses
are deemed unavoidable and have been allocated to products based on sales dollars.
9. Assume that Cane expects to produce and sell 88,000 Alphas during the current year. A supplier has offered to manufacture and
deliver 88,000 Alphas to Cane for a price of $112 per unit. If Cane buys 88,000 units from the supplier instead of making those units,
how much will profits increase or decrease?
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