Cane Company manufactures two products called Alpha and Beta that sell for $150 and $110, respectively. Each product uses only one type of raw material that costs $5 per pound. The company has the capacity to annually produce 108,000 units of each product. Its average cost per unit for each product at this level of activity are given below: Alpha $ 30 26 Beta $ 15 22 13 Direct materials Direct labor Variable manufacturing overhead Traceable fixed manufacturing overhead Variable selling expenses Common fixed expenses Total cost per unit 22 24 16 $130 $102 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. 6. Assume that Cane normally produces and sells 96,000 Betas per year. What is the financial advantage (disadvantage) of discontinuing the Beta product line? Financial (disadvantage) Financial advantage 7. Assume that Cane normally produces and sells 46,000 Betas per year. What is the financial advantage (disadvantage) of discontinuing the Beta product line? Financial (disadvantage) Financial advantage 8. Assume that Cane normally produces and sells 66,000 Betas and 86,000 Alphas per year. If Cane discontinues the Beta product line, its sales representatives could increase sales of Alpha by 12,000 units. What is the financial advantage (disadvantage) of discontinuing the Beta product line? Financial (disadvantage) Financial advantage 9. Assume that Cane expects to produce and sell 86,000 Alphas during the current year. A supplier has offered to manufacture and deliver 86,000 Alphas to Cane for a price of $104 per unit. What is the financial advantage (disadvantage) of buying 86,000 units from the supplier instead of making those units? Financial (disadvantage) Financial advantage 10. Assume that Cane expects to produce and sell 56,000 Alphas during the current year. A supplier has offered to manufacture and deliver 56,000 Alphas to Cane for a price of $104 per unit. What is the financial advantage (disadvantage) of buying 56,000 units from the supplier instead of making those units? Financial (disadvantage) Financial advantage