Cane Company manufactures two products called Alpha and Beta that sell for $195 and $150, respectively. Each product uses only one type of raw material that costs $5 per pound. The company has the capacity to annually produce 123,000 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 22 30 27 30 $ 183 Betal $ 15 28 20 33 23 25 $ 144 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. Foundational 13-3 (Algo) 3. Assume that Cane expects to produce and sell 95,000 Alphas during the current year. One of Cane's sales representatives has found a new customer who is willing to buy 25,000 additional Alphas for a price of $140 per unit. What is the financial advantage (disadvantage) of accepting the new customer's order?
Cane Company manufactures two products called Alpha and Beta that sell for $195 and $150, respectively. Each product uses only one type of raw material that costs $5 per pound. The company has the capacity to annually produce 123,000 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 22 30 27 30 $ 183 Betal $ 15 28 20 33 23 25 $ 144 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. Foundational 13-3 (Algo) 3. Assume that Cane expects to produce and sell 95,000 Alphas during the current year. One of Cane's sales representatives has found a new customer who is willing to buy 25,000 additional Alphas for a price of $140 per unit. What is the financial advantage (disadvantage) of accepting the new customer's order?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Please do not give salutations in image format thankuh
![The Foundational 15 (Algo) [LO13-2, LO13-3, LO13-4, LO13-5, LO13-6]
[The following information applies to the questions displayed below.]
Cane Company manufactures two products called Alpha and Beta that sell for $195 and $150,
respectively. Each product uses only one type of raw material that costs $5 per pound. The company has
the capacity to annually produce 123,000 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
22
30
27
30
Save & Exit
Beta
$ 15
28
20
33
23
25
$183 $ 144
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.
Submit
Foundational 13-3 (Algo)
3. Assume that Cane expects to produce and sell 95,000 Alphas during the current year. One of Cane's sales
representatives has found a new customer who is willing to buy 25,000 additional Alphas for a price of $140 per unit. What
is the financial advantage (disadvantage) of accepting the new customer's order?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F1101b12a-f544-4cff-a511-6ca515ca8b1d%2F4e82dfd3-c7b1-4dbe-bbde-66313d888bc9%2F9f9mc7i_processed.jpeg&w=3840&q=75)
Transcribed Image Text:The Foundational 15 (Algo) [LO13-2, LO13-3, LO13-4, LO13-5, LO13-6]
[The following information applies to the questions displayed below.]
Cane Company manufactures two products called Alpha and Beta that sell for $195 and $150,
respectively. Each product uses only one type of raw material that costs $5 per pound. The company has
the capacity to annually produce 123,000 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
22
30
27
30
Save & Exit
Beta
$ 15
28
20
33
23
25
$183 $ 144
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.
Submit
Foundational 13-3 (Algo)
3. Assume that Cane expects to produce and sell 95,000 Alphas during the current year. One of Cane's sales
representatives has found a new customer who is willing to buy 25,000 additional Alphas for a price of $140 per unit. What
is the financial advantage (disadvantage) of accepting the new customer's order?
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