Cane Company manufactures two products called Alpha and Beta that sell for $185 and $120, respectively. Each product uses only one type of raw material that costs $5 per pound. The company has the capacity to annually produce 112,000 units of each product. Its average cost per unit for each product at this level of activity are given below:

	Alpha				Beta
Direct materials		$	30			$	10
Direct labor			22				29
Variable manufacturing overhead			20				13
Traceable fixed manufacturing overhead			24				26
Variable selling expenses			20				16
Common fixed expenses			23				18
Total cost per unit		$	139			$	112

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.

3. Assume that Cane expects to produce and sell 88,000 Alphas during the current year. One of Cane's sales representatives has found a new customer who is willing to buy 18,000 additional Alphas for a price of $112 per unit. What is the financial advantage (disadvantage) of accepting the new customer's order?

Ch 12 HWw Save & Exit Help Ch 12 HW G 3 Required information The following informatiort applies to the questions displayed below Cane Company manufactures two products called Alpha and Beta that sell for $185 and $120, respectively. Each product uses only one type of raw material that costs $5 per pound. The company has the capacity to annually produce 112,000 units of each product. Its average cost per unit for each product at this level of activity are given below: Part 3 of 14 alpha eta s 10 29 13 26 1.07 Diract naterials Direct labor Variable nanutacturing overhead traceable fixed marufacturing overhead Variable selling expensea Common fixod axpescs 20 24 20 Total cost ser unit ble fixed manufacturing overhead to be avoidable, whereas its common fixed e allocated to products The company considers its traceable overhead to based on sale xpen ses unavoldatble and h s dollars. are have been 3. Assume that Cone expects to produce and sell foun produce and sell 88,000 Alphas cluring thegurrent year. One of Cane's sales representatives has who is willing to buy 18,000 additional Alphas for a pice of $112 per unit. What is the financial advantage disadvantage) of accepting the new customer's order? 14 | 14 3 5 Next > Pre MacBook Pro 6 0