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: Direct materials. Direct labor Variable manufacturing overhead Traceable fixed manufacturing overhead Variable selling expenses Common fixed expenses Total cost per unit 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. 5. Assume that Cane expects to produce and sell 108,000 Alphas during the current year. One of Cane's sales representatives has found a new customer who is willing to buy 23,000 additional Alphas for a price of $132 per unit; however pursuing this opportunity will decrease Alpha sales to regular customers by 12,000 units. Alpha Beta $ 40 $ 24 33 28 20 18 11 28 31 25 21 28 23 $ 174 $ 145 a. What is the financial advantage (disadvantage) of accepting the new customer's order? b. Based on your calculations above should the special order be accepted? Complete this question by entering your answers in the tabs below. Req 5A Req 5B What is the financial advantage (disadvantage) of accepting the new customer's order? < Req 5A Req 5B >
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: Direct materials. Direct labor Variable manufacturing overhead Traceable fixed manufacturing overhead Variable selling expenses Common fixed expenses Total cost per unit 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. 5. Assume that Cane expects to produce and sell 108,000 Alphas during the current year. One of Cane's sales representatives has found a new customer who is willing to buy 23,000 additional Alphas for a price of $132 per unit; however pursuing this opportunity will decrease Alpha sales to regular customers by 12,000 units. Alpha Beta $ 40 $ 24 33 28 20 18 11 28 31 25 21 28 23 $ 174 $ 145 a. What is the financial advantage (disadvantage) of accepting the new customer's order? b. Based on your calculations above should the special order be accepted? Complete this question by entering your answers in the tabs below. Req 5A Req 5B What is the financial advantage (disadvantage) of accepting the new customer's order? < Req 5A Req 5B >
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Please do not give solution in image format thanku
![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:
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
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.
Beta
$ 24
28
18
31
5. Assume that Cane expects to produce and sell 108,000 Alphas during the current year. One of Cane's sales representatives has
found a new customer who is willing to buy 23,000 additional Alphas for a price of $132 per unit; however pursuing this opportunity
will decrease Alpha sales to regular customers by 12,000 units.
Req 5A
21
23
$ 145
a. What is the financial advantage (disadvantage) of accepting the new customer's order?
b. Based on your calculations above should the special order be accepted?
Req 5B
Complete this question by entering your answers in the tabs below.
< Req 5A
What is the financial advantage (disadvantage) of accepting the new customer's order?
Req 5B
>](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F659fb910-117f-4c33-a9e0-29d3ad7fdc50%2Faee32b72-1f34-418b-ba41-c2c854450c7c%2Fmccuqp_processed.png&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 $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
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.
Beta
$ 24
28
18
31
5. Assume that Cane expects to produce and sell 108,000 Alphas during the current year. One of Cane's sales representatives has
found a new customer who is willing to buy 23,000 additional Alphas for a price of $132 per unit; however pursuing this opportunity
will decrease Alpha sales to regular customers by 12,000 units.
Req 5A
21
23
$ 145
a. What is the financial advantage (disadvantage) of accepting the new customer's order?
b. Based on your calculations above should the special order be accepted?
Req 5B
Complete this question by entering your answers in the tabs below.
< Req 5A
What is the financial advantage (disadvantage) of accepting the new customer's order?
Req 5B
>
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