Cane Company manufactures two products called Alpha and Beta that sell for $$205$ and $$164,$ respectively. Each product uses only one type of raw material that costs $$8$ per pound. The company has the capacity to annually produce $127,000$ units of each product. Its average cost per unit for each product at this level of activity are given below:

Alpha Beta

Direct materials $ $40$ $ $24$

Direct labor $3730$

Variable manufacturing overhead $2422$

Traceable fixed manufacturing overhead $3235$

Variable selling expenses $2925$

Common fixed expenses $3227$

Total cost per unit $ $194$ $ $163$

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.

Foundational $11-6($Algo$)$

$6.$ Assume that Cane normally produces and sells $107,000$ Betas per year. What is the financial advantage $($disadvantage$)$ of discontinuing the Beta product line?Cane Company manufactures two products called Alpha and Beta that sell for $$205$ and $$164,$ respectively. Each product uses only one type of raw material that costs $$8$ per pound. The company has the capacity to annually produce $127,000$ units of each product. Its average cost per unit for each product at this level of activity are given below:

Alpha Beta

Direct materials $ $40$ $ $24$

Direct labor $3730$

Variable manufacturing overhead $2422$

Traceable fixed manufacturing overhead $3235$

Variable selling expenses $2925$

Common fixed expenses $3227$

Total cost per unit $ $194$ $ $163$

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.

Foundational $11-6($Algo$)$

$6.$ Assume that Cane normally produces and sells $107,000$ Betas per year. What is the financial advantage $($disadvantage$)$ of discontinuing the Beta product line?