Required information The Foundational 15 (Algo) [LO11-2, LO11-3, LO11-4, LO11-5, LO11-6] [The following information applies to the questions displayed below.] Cane Company manufactures two products called Alpha and Beta that sell for $130 and $90, respectively. Each product uses only one type of raw material that costs $5 per pound. The company has the capacity to annually produce 102,000 units of each product. Its average cost per unit for each product at this level of activity are given below: Alpha Beta Direct materials $ 25 $ 10 Direct labor 22 21 Variable manufacturing overhead 17 7 Traceable fixed manufacturing overhead 18 20 Variable selling expenses 14 10 Common fixed expenses 17 12 Total cost per unit $ 113 $ 80 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 11-7 (Algo) 7. Assume that Cane normally produces and sells 42,000 Betas per year. What is the financial advantage (disadvantage) of discontinuing the Beta product line? Answer is complete but not entirely correct. Financial advantage 924,000
Required information The Foundational 15 (Algo) [LO11-2, LO11-3, LO11-4, LO11-5, LO11-6] [The following information applies to the questions displayed below.] Cane Company manufactures two products called Alpha and Beta that sell for $130 and $90, respectively. Each product uses only one type of raw material that costs $5 per pound. The company has the capacity to annually produce 102,000 units of each product. Its average cost per unit for each product at this level of activity are given below: Alpha Beta Direct materials $ 25 $ 10 Direct labor 22 21 Variable manufacturing overhead 17 7 Traceable fixed manufacturing overhead 18 20 Variable selling expenses 14 10 Common fixed expenses 17 12 Total cost per unit $ 113 $ 80 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 11-7 (Algo) 7. Assume that Cane normally produces and sells 42,000 Betas per year. What is the financial advantage (disadvantage) of discontinuing the Beta product line? Answer is complete but not entirely correct. Financial advantage 924,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Vishnu
![Required information
The Foundational 15 (Algo) [LO11-2, LO11-3, LO11-4, LO11-5, LO11-6]
[The following information applies to the questions displayed below.]
Cane Company manufactures two products called Alpha and Beta that sell for $130 and $90, respectively. Each product
uses only one type of raw material that costs $5 per pound. The company has the capacity to annually produce 102,000
units of each product. Its average cost per unit for each product at this level of activity are given below:
Alpha
Beta
Direct materials
$ 25
$ 10
Direct labor
22
21
Variable manufacturing overhead
17
7
Traceable fixed manufacturing overhead
18
20
Variable selling expenses
14
10
Common fixed expenses
17
12
Total cost per unit
$ 113
$ 80
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 11-7 (Algo)
7. Assume that Cane normally produces and sells 42,000 Betas per year. What is the financial advantage (disadvantage) of
discontinuing the Beta product line?
Answer is complete but not entirely correct.
Financial advantage
924,000](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F78d284ca-842d-4c29-8c25-6048c379d059%2F5dbf8965-89f0-4d21-ad5f-ea5d79ee64e0%2Feyykml_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Required information
The Foundational 15 (Algo) [LO11-2, LO11-3, LO11-4, LO11-5, LO11-6]
[The following information applies to the questions displayed below.]
Cane Company manufactures two products called Alpha and Beta that sell for $130 and $90, respectively. Each product
uses only one type of raw material that costs $5 per pound. The company has the capacity to annually produce 102,000
units of each product. Its average cost per unit for each product at this level of activity are given below:
Alpha
Beta
Direct materials
$ 25
$ 10
Direct labor
22
21
Variable manufacturing overhead
17
7
Traceable fixed manufacturing overhead
18
20
Variable selling expenses
14
10
Common fixed expenses
17
12
Total cost per unit
$ 113
$ 80
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 11-7 (Algo)
7. Assume that Cane normally produces and sells 42,000 Betas per year. What is the financial advantage (disadvantage) of
discontinuing the Beta product line?
Answer is complete but not entirely correct.
Financial advantage
924,000
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