Cane Company manufactures two products called Alpha and Beta that sell for $120 and $80, respectively. Each product uses only one type of raw material that costs $6 per pound. The company has the capacity to annually produce 100,000 units of each product. Its average cost per unit for each product at this level of activity is given below: Direct materials Direct labor Variable manufacturing overhead Traceable fixed manufacturing overhead Variable selling expenses Common fixed expenses Total cost per unit Alpha $ 30 20 7 16 12 15 $ 100 Beta $ 12 15 5 18 8 10 $ 68 YO The company's traceable fixed manufacturing overhead is avoidable, whereas its cominon fixed expenses are unavoidable and have been allocated to products based on sales dollars. 5. Assume Cane expects to produce and sell 95,000 Alphas during the current year. One of Cane's sales representatives found a new customer willing to buy 10,000 additional Alphas for a price of $80 per unit; however, pursuing this opportunity will decrease Alpha sales to regular customers by 5,000 units. a. What is the financial advantage (disadvantage) of accepting the new customer's order? b. Based on your calculations above should the special order be accepted?

Cane Company manufactures two products called Alpha and Beta that sell for $120 and $80, respectively. Each product uses only one type of raw material that costs $6 per pound. The company has the capacity to annually produce 100,000 units of each product. Its average cost per unit for each product at this level of activity is given below: The company's traceable fixed manufacturing overhead is avoidable, whereas its cominon fixed expenses are unavoidable and have been allocated to products based on sales dollars. 5. Assume Cane expects to produce and sell 95,000 Alphas during the current year. One of Cane's sales representatives found a ne customer willing to buy 10,000 additional Alphas for a price of $80 per unit; however, pursuing this opportunity will decrease Alpha sales to regular customers by 5,000 units. a. What is the financial advantage (disadvantage) of accepting the new customer's order? b. Based on your calculations obove should the special order be accepted