Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Cane company produces two products called Alpha and Beta that sell for $108.00 and $72,00 respectively. Each product ues only one type of raw material

image text in transcribed
image text in transcribed
Cane company produces two products called Alpha and Beta that sell for $108.00 and $72,00 respectively. Each product ues only one type of raw material that costs $6 per pound. The company has the capacity to annually produce 100,000 units of each product. Its average cost per unit for each product at this level of activity is given below: Direct material Direct labor Variable overhead Traceable fixed cost Variable selling expenses Commom fixed expenses Alpha 30 18 Beta 12 14 8500608 6 12 10 10 10 8 12 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 90,000 Betas per year. What is the financial advantage (disadvantage) of discontinuing the Beta product line? 7. Assume that Cane normally produces and sells 40,000 Betas per year. What is the financial advantage (disadvantage) of discontinuing the Beta product line? 8. Assume that Cane normally produces and sells 60,000 Betas and 80,000 Alphas per year. If Cane discontinues the Beta product line, its sales representatives could increase sales of Alpha by 15.000 units. What is the financial advantage (disadvantage) of discontinuing the Beta product line? 9. Assume that Cane expects to produce and sell 80.000 Alphas during the current year. A sup- plier has offered to manufacture and deliver 80,000 Alphas to Cane for a price of $80 per unit. What is the financial advantage (disadvantage) of buying 80,000 units from the supplier instead of making those units? 10. Assume that Cane expects to produce and sell 50,000 Alphas during the current year. A sup- plier has offered to manufacture and deliver 50,000 Alphas to Cane for a price of $80 per unit. What is the financial advantage (disadvantage) of buying 50,000 units from the supplier instead of making those units

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Analytical Corporate Finance

Authors: Angelo Corelli

1st Edition

3319395483, 9783319395487

More Books

Students also viewed these Accounting questions

Question

What other publications/presentations does the person have?

Answered: 1 week ago