CH 6 Required information [The following information applies to the questions displayed below) Cane Company manufactures two products called Alpha and Beta that sell for $120 and $80, respectively. Each product uses 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 are given below: Direet materials Direct labor Variable manufacturing overhead Teaceable fixed manufacturing overhead Variable selling expenses Common fixed expenses Total cost per unit Alpha $ 30 20 7 16 12 15 $100 $12 15 5 18 8 10 568 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 90.000 Betas during the current year. One or Cane's sales representatives has found a new customer who is willing to buy 5,000 additional Betas for a price of $39 per unit. What is the financial advantage (disadvantage) of accepting the new customer's order? Triancial (disadvantage) Required information [The following information applies to the questions displayed below.) Cane Company manufactures two products called Alpha and Beta that sell for $120 and $80, respectively. Each product uses 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 are given below: Direct materials Direct labor Variable manufacturing overhead Teaceable fixed manufacturing overhead Variable selling expenses Common fixed expenses Total cost per unit Alpha $ 30 20 7 16 12 15 $100 Beta $12 15 5 18 8 10 $68 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. 3. Assume that Cone expects to produce and sell 80,000 Alphas during the current year. One of Cane's soles representatives hos found a new customer who is willing to buy 10,000 additional Alphas for a price of $80 per unit. What is the financial advantage (disadvantage) of accepting the new customer's order? Financial advantage $ 110,000 Required information [The following information applies to the questions displayed below) Cane Company manufactures two products called Alpha and Beta that sell for $120 and $80, respectively. Each product uses 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 are given below Alpha Beta Direct materials $ 30 Direct labor 20 15 Variable manufacturing overhead 7 Traceable fixed manufacturing overhead 16 18 Variable selling expenses Common fixed expenses Total cost per unit $68 $12 5 12 15 S100 8 10 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 foxed expenses $2,500,000 Required information (The following information applies to the questions displayed below.) Cane Company manufactures two products called Alpha and Beta that sell for $120 and $80, respectively. Each product uses 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 are given below: Direct materials Direct labor Variable manufacturing overhead Traceable fixed manufacturing overhead Variable selling expenses Common fixed expenses Total cost per unit Alpha $ 30 20 7 16 12 15 $100 Beta $12 15 5 18 8 10 $68 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 1.600.000 1,800,000
