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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
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 1 units of each product. Its average cost per unit for each product at this level of activity are given below 00.000 AlphaBeta $ 38 $12 15 Direct materials Direct labor Variable manufacturing overhead Traceable fixed manufacturing overhead Variable selling expenses Common fixed expenses Total cost per unit 28 16 12 18 1e $ 68 $1e0 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. 8. Assume that Cane normally produces and sells 60,000 Betas and 80,000 Alphas per year. If Cane discontinues the Beta product line, ts sales representatives could increase sales of Alpha by 15,000 units. What is the financial advantage (disadvantage) of discontinuing the Beta product line
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