Cane Company manufactures two products called Alpha and Beta that sell for $225 and $175, respectively. Each product uses only one type of raw material that costs $6 per pound. The company has the capacity to annually produce 130,000 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 $ 42 42 Incremental net operating income 26 34 < Prev 31 34 $209 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. Beta 5. Assume that Cane expects to produce and sell 114,000 Alphas during the current year. One of Cane's sales representatives has found a new customer that is willing to buy 29,000 additional Alphas for a price of $156 per unit. If Cane accepts the customer's offer, it will decrease Alpha sales to regular customers by 13,000 units. a. Calculate the incremental net operating income if the order is accepted? (Loss amount should be indicated with a minus sign.) 5 $24 6 32 24 37 27 29 $173 S 7 10 of 10 # Next >
Cane Company manufactures two products called Alpha and Beta that sell for $225 and $175, respectively. Each product uses only one type of raw material that costs $6 per pound. The company has the capacity to annually produce 130,000 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 $ 42 42 Incremental net operating income 26 34 < Prev 31 34 $209 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. Beta 5. Assume that Cane expects to produce and sell 114,000 Alphas during the current year. One of Cane's sales representatives has found a new customer that is willing to buy 29,000 additional Alphas for a price of $156 per unit. If Cane accepts the customer's offer, it will decrease Alpha sales to regular customers by 13,000 units. a. Calculate the incremental net operating income if the order is accepted? (Loss amount should be indicated with a minus sign.) 5 $24 6 32 24 37 27 29 $173 S 7 10 of 10 # Next >
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:Cane Company manufactures two products called Alpha and Beta that sell for $225 and $175, respectively. Each product
uses only one type of raw material that costs $6 per pound. The company has the capacity to annually produce 130,000
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
$ 42
42
Incremental net operating income
26
34
< Prev
31
34
$209
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.
Beta
5. Assume that Cane expects to produce and sell 114,000 Alphas during the current year. One of Cane's sales representatives has
found a new customer that is willing to buy 29,000 additional Alphas for a price of $156 per unit. If Cane accepts the customer's offer,
it will decrease Alpha sales to regular customers by 13,000 units.
a. Calculate the incremental net operating income if the order is accepted? (Loss amount should be indicated with a minus sign.)
5
$24
6
32
24
37
27
29
$173
S
7
10 of 10
#
Next >
![Required information
[The following information applies to the questions displayed below.]
Cane Company manufactures two products called Alpha and Beta that sell for $225 and $175, respectively. Each product
uses only one type of raw material that costs $6 per pound. The company has the capacity to annually produce 130,000
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
Net operating income
Alpha
$42
42
26
34
31
34
$209
by
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.
< Prev
Betal
4. Assume that Cane expects to produce and sell 109,000 Betas during the current year. One of Cane's sales representatives has
found a new customer that is willing to buy 5,000 additional Betas for a price of $82 per unit. If Cane accepts the customer's offer, how
much will its profits increase or decrease?
$24
4 5
32
24
37
27
29
$173
S
6
10 of 10
H
Next >](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F15c83c94-5314-4a21-9e70-4aa8e53c29f2%2F7e1f8d1e-5186-4933-a5cf-2f33952a72c2%2Fl60k7cv_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Required information
[The following information applies to the questions displayed below.]
Cane Company manufactures two products called Alpha and Beta that sell for $225 and $175, respectively. Each product
uses only one type of raw material that costs $6 per pound. The company has the capacity to annually produce 130,000
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
Net operating income
Alpha
$42
42
26
34
31
34
$209
by
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.
< Prev
Betal
4. Assume that Cane expects to produce and sell 109,000 Betas during the current year. One of Cane's sales representatives has
found a new customer that is willing to buy 5,000 additional Betas for a price of $82 per unit. If Cane accepts the customer's offer, how
much will its profits increase or decrease?
$24
4 5
32
24
37
27
29
$173
S
6
10 of 10
H
Next >
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