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 unit costs for each product at this level of activity are given below: Beta Alpha $ 30 Direct materials $ 10 Direct labor 22 29 20 13 Variable manufacturing overhead Traceable fixed manufacturing overhead 24 26 20 16 Variable selling expenses 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 deemed unavoidable and have been allocated to products based on sales dollars. Required: 1. What is the total amount of traceable fixed manufacturing overhead for the Alpha product line and for the Beta product line? Alpha Beta Traceable fixed manufacturing overhead Required information value: 1.00 points 2. What is the company's total amount of common fixed expenses? Total common fixed expenses Required information value: 1.00 points 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 that is willing to buy 18,000 additional Alphas for a price of $112 per unit. If Cane accepts the customer's offer, how much will its profits increase or decrease? Net operating income by 4. Assume that Cane expects to produce and sell 98,000 Betas during the current year. One of Cane's sales representatives has found a new customer that is willing to buy 4,000 additional Betas for a price of $47 per unit. If Cane accepts the customer's offer, how much will its profits increase or decrease? Net operating income Required information value: 1.00 points 5. Assume that Cane expects to produce and sell 103,000 Alphas during the current year. One of Cane's sales representatives has found a new customer that is willing to buy 18,000 additional Alphas for a price of $112 per unit. If Cane accepts the customer's offer, it will decrease Alpha sales to regular customers by 9,000 units. a. Calculate the incremental net operating income if the order is accepted? (Loss amount should be indicated with a minus sign.) Incremental net operating income b. Based on your calculations above should the special order be accepted? Yes 0 0 O No 6. Assume that Cane normally produces and sells 98,000 Betas per year. If Cane discontinues the Beta product line, how much will profits increase or decrease? Prom decreases $ 2.184.000 6. Required information 1.00 points 8. Assume that Cane normally produces and sells 68,000 Betas and 88,000 Alphas per year. If Cane discontinues the Beta product line, its sales representatives could increase sales of Alpha by 12,000 units. If Cane discontinues the Beta product line, how much would profits increase or decrease? by Required information . value 1.00 points 9. Assume that Cane expects to produce and sell 88,000 Alphas during the current year. A supplier has offered to manufacture and deliver 88,000 Alphas to Cane for a price of $112 per unit. If Cane buys 88,000 units from the supplier instead of making those units, how much will profits increase or decrease? Proft
