Cane Company manufactures two products called Alpha and Beta that sell for $175 and $135, respectively. Each product uses only one type of raw material that costs $5 per pound. The company has the capacity to annually produce 117,000 units of each product. Its average cost per unit for each product at this level of activity are given below: Alpha Beta Direct materials $ 40 Direct labor $ 15 Variable manufacturing overhead Traceable fixed manufacturing overhead 26 Variable selling expenses 19 Common fixed expenses 21 Total cost per unit $ 163 $ 130 30 18 30 16 29 23 26 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. Required: 1. What is the total amount of traceable fixed manufacturing overhead for each of the two products? Alpha Beta Traceable fixed manufacturing overhead of 15 Cane Company manufactures two products called Alpha and Beta that sell for $175 and $135, respectively. Each product uses only one type of raw material that costs $5 per pound. The company has the capacity to annually produce 117,000 units of each product. Its average cost per unit for each product at this level of activity are given below: Alpha Beto Direct materials $ 40 $ 15 Direct labor 30 30 Variable manufacturing overhead 18 Traceable fixed manufacturing overhead 26 29 Variable selling expenses 23 19 Connon fixed expenses 26 21 Total cost per unit $ 163 $ 130 16 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. 2. What is the company's total amount of common fixed expenses? Total common fixed expenses Cane Company manufactures two products called Alpha and Beta that sell for $175 and $135, respectively. Each product uses only one type of raw material that costs $5 per pound. The company has the capacity to annually produce 117,000 units of each product. Its average cost per unit for each product at this level of activity are given below Direct materials Alpha Beta $ 40 Direct labor $ 15 Variable manufacturing overhead 30 30 18 26 Traceable fixed manufacturing overhead Variable selling expenses 26 29 23 Common fixed expenses 26 21 Total cost per unit $ 163 $ 130 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 soles dollars. 19 3. Assume that Cane expects to produce and sell 91,000 Alphas during the current year. One of Cane's sales representatives has found a new customer who is willing to buy 21,000 additional Alphas for a price of $124 per unit. What is the financial advantage (disadvantage) of accepting the new customer's order? Financial (disadvantage) Financial advantage Cane Company manufactures two products called Alpha and Beta that sell for $175 and $135, respectively. Each product uses only one type of raw material that costs $5 per pound. The company has the capacity to annually produce 117,000 units of each product. Its average cost per unit for each product at this level of activity are given below: Alpha Beta Direct materials $ 40 $ 15 Direct labor 30 30 Variable manufacturing overhead 18 16 Traceable fixed manufacturing overhead 26 29 Variable selling expenses 23 19 Common fixed expenses 26 21 Total cost per unit $ 163 $ 130 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. 4. Assume that Cane expects to produce and sell 101,000 Betas during the current year. One of Cane's sales representatives has found a new customer who is willing to buy 3,000 additional Betas for a price of $59 per unit. What is the financial advantage (disadvantage) of accepting the new customer's order
