Foundational 13-8 (Algo) 8. Assume that Cane normally produces and sells 67,000 Betas and 87,000 Alphas per year. If Cane discontinues the Beta product line, its sales representatives could increase sales of Alpha by 11,000 units. What is the financial advantage (disadvantage) of discontinuing the Beta product line?
Foundational 13-8 (Algo) 8. Assume that Cane normally produces and sells 67,000 Betas and 87,000 Alphas per year. If Cane discontinues the Beta product line, its sales representatives could increase sales of Alpha by 11,000 units. What is the financial advantage (disadvantage) of discontinuing the Beta product line?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Foundational 13-8 (Algo)
8. Assume that Cane normally produces and sells 67,000 Betas and 87,000 Alphas per year. If Cane
discontinues the Beta product line, its sales representatives could increase sales of Alpha by 11,000 units. What
is the financial advantage (disadvantage) of discontinuing the Beta product line?
![Required information
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 $155 and $115,
respectively. Each product uses only one type of raw material that costs $6 per pound. The
company has the capacity to annually produce 110,000 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
$ 24
$ 12.
23
26
22
12
23
25
19
15
22
17
$ 133 $ 107
Beta
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.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F387615d0-f1d5-44ee-a43a-a66b40a1b792%2Ff36bec67-d145-4431-9cb7-6a896e4e9e69%2Fmjqfqk_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Required information
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 $155 and $115,
respectively. Each product uses only one type of raw material that costs $6 per pound. The
company has the capacity to annually produce 110,000 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
$ 24
$ 12.
23
26
22
12
23
25
19
15
22
17
$ 133 $ 107
Beta
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.
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