### Required Information**The following information applies to the questions displayed below.**Cane Company manufactures two products called Alpha and Beta that sell for $185 and $150, respectively. Each product uses only one type of raw material that costs $8 per pound. The company has the capacity to annually produce 119,000 units of each product. Its average cost per unit for each product at this level of activity are given below:| Cost Components | Alpha (in $) | Beta (in $) ||------------------------------------------|--------------|-------------|| Direct materials | 40 | 24 || Direct labor | 33 | 28 || Variable manufacturing overhead | 20 | 18 || Traceable fixed manufacturing overhead | 28 | 31 || Variable selling expenses | 25 | 21 || Common fixed expenses | 28 | 23 || **Total cost per unit** | **174** | **145** |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.### Question 6:Assume that Cane normally produces and sells 103,000 Betas per year. What is the financial advantage (disadvantage) of discontinuing the Beta product line?

Decision making in the cost accounting system is one of the criteria that helps in selecting one…

Cane Company manufactures two products called Alpha and Beta that sell for $185 and $150, respectively. Each product uses only one type of raw material that costs $8 per pound. The company has the capacity to annually produce 119,000 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 33 20 28 25 28 $174 Financial (disadvantage) Beta $ 24 28 18 31 21 23 $ 145 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 103,000 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 $185 and $150, respectively. Each product uses only one type of raw material that costs $8 per pound. The company has the capacity to annually produce 119,000 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 33 20 28 25 28 $174 Financial (disadvantage) Beta $ 24 28 18 31 21 23 $ 145 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 103,000 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

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