**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 average cost per unit for each product at this level of activity is given below:| Cost Type | Alpha | Beta ||------------------------------------------|-------|------|| Direct materials | $42 | $24 || Direct labor | $42 | $32 || Variable manufacturing overhead | $26 | $24 || Traceable fixed manufacturing overhead | $34 | $37 || Variable selling expenses | $31 | $27 || Common fixed expenses | $34 | $29 || Total cost per unit | $209 | $173 |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.Assume that Cane normally produces and sells 59,000 Betas per year. What is the financial advantage (disadvantage) of discontinuing the Beta product line?

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FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Required information [The following information applies to the questions displayed below.] Morning Dove Company manufactures one model of birdbath, which is very popular. Morning Dove sells all units it produces each month. The relevant range is 0 to 1,900 units, and monthly production costs for the production of 1,500 units follow. Morning Dove's utilities and maintenance costs are mixed with the fixed components shown in parentheses. Production Costs Direct materials Direct labor Utilities ($130 fixed) Supervisor's salary Maintenance ($340 fixed) Depreciation Total Cost $ 2,300 7,700 570 3,300 550 750 Suppose it sells each birdbath for $22. Required: 1. Calculate the unit contribution margin and contribution margin ratio for each birdbath sold. 2. Complete the contribution margin income statement assuming that Morning Dove produces and sells 1,700 units. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Calculate the unit contribution margin and…
Required information [The following information applies to the questions displayed below.] Morning Dove Company manufactures one model of birdbath, which is very popular. Morning Dove sells all units it produces each month. The relevant range is 0 to 1,500 units, and monthly production costs for the production of 500 units follow. Morning Dove's utilities and maintenance costs are mixed with the fixed components shown in parentheses. Production Costs Direct materials Direct labor Utilities ($100 fixed) Supervisor's salary Maintenance ($280 fixed) Depreciation Total Cost $ 1,500 7,500 650 3,000 480 800 Required: 1. Identify each cost as variable, fixed, or mixed, and express each cost as a rate per month or per unit (or combination thereof). 2. Determine the total fixed cost per month and the variable cost per unit for Morning Dove. 3. State Morning Dove's linear cost equation for a production level of 0 to 1,500 units. Enter answer as an equation in the form of y= a + bx. 4. Calculate…
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Merlot Manufacturing Ltd makes three different products, the details of which are as follows: Product (code name) 167X 325Y 7422 Selling price per unit (£) 40 30 28 Variable cost per unit (£) 15 18 14 Weekly demand (units) 45 50 20 Skilled labour time per unit (hours) 3. Skilled labour time is limited to 200 hours a week. Which combination of products should be manufactured if the business is to produce the highest profit? Show your answer by filling out the table below. (Round up units of product 167X units of product 325Y units of product 742Z Enter any number or expression in each of the edit fields. 26
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[The following information applies to the questions displayed below.] Oslo Company prepared the following contribution format income statement based on a sales volume of 1,000 units (the relevant range of production is 500 units to 1,500 units): Sales $ 70,000 Variable expenses 38,500 Contribution margin 31,500 Fixed expenses 23,310 Net operating income $ 8,190 1. What is the contribution margin per unit? (Round your answer to 2 decimal places.) 2. What is the contribution margin ratio? 3. What is the variable expense ratio? 4. If sales increase to 1,001 units, what would be the increase in net operating income?
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