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7 Required information [The following information applies to the questions displayed below.] Part 7 of 10 Cane Company manufactures two products called Alpha and Beta
7 Required information [The following information applies to the questions displayed below.] Part 7 of 10 Cane Company manufactures two products called Alpha and Beta that sell for $150 and $105, respectively. Each product uses only one type of raw material that costs $5 per pound. The company has the capacity to annually produce 107.000 units of each product. Its unit costs for each product at this level of activity are given below: 10 points Direct materials Direct labour Variable manufacturing overhead Traceable fixed manufacturing overhead Variable selling expenses Common fixed expenses Cost per unit Alpha $ 30 25 12 21 17 20 $125 Beta $ 10 20 10 23 13 15 $ 91 eBook References The company considers its traceable fixed manufacturing overhead to be avoidable, whereas its common fixed expenses are deemed unavoidable and have been allocated to products based on sales dollars. 7. Assume that Cane normally produces and sells 45,000 Betas per year. If Cane discontinues the Beta product line, how much will profits increase or decrease? Profit
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