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: Direct labor Direct materials Variable manufacturing overhead Common fixed expenses Traceable fixed manufacturing overhead Variable selling expenses Total cost per unit Alpha Beta $ 25 $ 10 22 21 17 7 18 20 14 10 17 12 $ 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: Direct labor Direct materials Variable manufacturing overhead Common fixed expenses Traceable fixed manufacturing overhead Variable selling expenses Total cost per unit Alpha Beta $ 25 $ 10 22 21 17 7 18 20 14 10 17 12 $ 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
![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:
Direct labor
Direct materials
Variable manufacturing overhead
Common fixed expenses
Traceable fixed manufacturing overhead
Variable selling expenses
Total cost per unit
Alpha
Beta
$ 25
$ 10
22
21
17
7
18
20
14
10
17
12
$ 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%2F39d31078-b83e-46b3-b696-b989a2093af5%2Fecf5d04f-f128-43f2-9ad6-3777f6c4bf02%2Fqfnjtvt_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:
Direct labor
Direct materials
Variable manufacturing overhead
Common fixed expenses
Traceable fixed manufacturing overhead
Variable selling expenses
Total cost per unit
Alpha
Beta
$ 25
$ 10
22
21
17
7
18
20
14
10
17
12
$ 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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