B Chapter 12 Foundational Problem UNIT COSTS(based on production of 100,000 units of each product). ALPHA BETA DIRECT MATERIAL $24 $18 DIRECT LABOR 20 16 VARIABLE OVERHEAD 10 6 VARIABLE SALES 10 6 TRACEABLE FIXED 12 10 COMMON FIXED COST 14 12 1 ADDITIONAL INFORMATION SELLING PRICE PER UNIT $120 $80 6 6 MATERIAL COST PER POUND The company considers its traceable fixed cost to be avoidable. whereas its common fixed expenses are unavoidabel. Chapter 12 6. Assume that Cane normally produces and sells 90,000 Betas per year. What is the financial advantage (disadvantage) of discontinuing the Beta product line? 7. Assume that Cane normally produces and sells 40,000 Betas per year. What is the financial advantage (disadvantage) of discontinuing the Beta product line? 8. Assume that Cane normally produces and sells 60,000 Betas and 80,000 Alphas per year. If Cane discontinues the Beta product line, its sales representatives could increase sales of Alpha by 15.000 units. What is the financial advantage (disadvantage) of discontinuing the Beta product line? 9. Assume that Cane expects to produce and sell 80,000 Alphas during the current year. A supplier has offered to manufacture and deliver 80,000 Alphas to Cane for a price of $80 per unit. What is the financial advantage (disadvantage) of buying 80,000 units from the supplier instead of making those units? 10. Assume that Cane expects to produce and sell 50,000 Alphas during the current year. A sup- plier has offered to manufacture and deliver 50,000 Alphas to Cane for a price of $80 per unit. What is the financial advantage (disadvantage) of buying 50,000 units from the supplier instead of making those units