Hardev Required information[The following information applies to the questions displayed below.]Cane Company manufactures two products called Alpha and Beta that sell for $205 and $164, respectively. Each productuses only one type of raw material that costs $8 per pound. The company has the capacity to annually produce 127,000units of each product. Its unit costs for each product at this level of activity are given below:Direct materialsDirect labourVariable manufacturing overheadTraceable fixed manufacturing overheadVariable selling expensesCommon fixed expensesCost per unitAlpha$ 40Net operating income3724322932$194byBeta$24The company considers its traceable fixed manufacturing overhead to be avoidable, whereas its common fixed expensesare deemed unavoidable and have been allocated to products based on sales dollars.3022352527$1633. Assume that Cane expects to produce and sell 97,000 Alphas during the current year. One of Cane's sales representatives hasfound a new customer that is willing to buy 27,000 additional Alphas for a price of $148 per unit. If Cane accepts the customer's offer,how much will its profits increase or decrease?

Relevant cost refers to the cost which differs between the two alternatives and hence is avoidable.…

Cane Company manufactures two products called Alpha and Beta that sell for $205 and $164, respectively. Each product uses only one type of raw material that costs $8 per pound. The company has the capacity to annually produce 127,000 units of each product. Its unit costs for each product at this level of activity are given below: Direct materials Direct labour Variable manufacturing overhead Traceable fixed manufacturing overhead Variable selling expenses Common fixed expenses Cost per unit Alpha $ 40 37 24 32 Net operating income 29 32 $194 by Beta $24 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. 30 22 35 25 27 $163 3. Assume that Cane expects to produce and sell 97,000 Alphas during the current year. One of Cane's sales representatives has found a new customer that is willing to buy 27,000 additional Alphas for a price of $148 per unit. If Cane accepts the customer's of how much will its profits increase or decrease?

Cane Company manufactures two products called Alpha and Beta that sell for $205 and $164, respectively. Each product uses only one type of raw material that costs $8 per pound. The company has the capacity to annually produce 127,000 units of each product. Its unit costs for each product at this level of activity are given below: Direct materials Direct labour Variable manufacturing overhead Traceable fixed manufacturing overhead Variable selling expenses Common fixed expenses Cost per unit Alpha $ 40 37 24 32 Net operating income 29 32 $194 by Beta $24 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. 30 22 35 25 27 $163 3. Assume that Cane expects to produce and sell 97,000 Alphas during the current year. One of Cane's sales representatives has found a new customer that is willing to buy 27,000 additional Alphas for a price of $148 per unit. If Cane accepts the customer's of how much will its profits increase or decrease?

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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