Chapter 12 Foundational Problem ALPHA UNIT COSTS(based on production of 100,000 units of each product). DIRECT MATERIAL BETA $18 $24 DIRECT LABOR 20 16 VARIABLE OVERHEAD 10 6 VARIABLE SALES 10 6 TRACEABLE FIXED 12 10 COMMON FIXED COST 14 12 ADDITIONAL INFORMATION SELLING PRICE PER UNIT $120 $80 6 6 MATERIAL COST PER POUND The company considers its traceable fixed cost to be avoidable. whereas its common fixed expenses are unavoidabel. Use the information above to answer questions 1 thru 5 on page 589 of the text. 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: Answer each question independently unless instructed otherwise.) What is the total amount of traceable fixed manufacturing overhead for each of the two products? 2 What is the company's total amount of common fixed expenses? Assume that Cane expects to produce and sell 80,000 Alphas during the current year. One of Cane's sales representatives has 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? 4. Assume that Cane expects to produce and sell 90,000 Betas during the current year. One of 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? 5. Assume that Cane expects to produce and sell 95,000 Alphas during the current year. One of Cane's sales representatives has found a new customer who is willing to buy 10,000 additional sales to regular customers by 5,000 units. What is the financial advantage (disadvantage) of accepting the new customer's order? connect The Foundational 15 Cane Company manufactures two products called Alpha and Beta that sell for $120 and $80, L012-2, L012-3, L012-4, respectively. Each product uses only one type of raw material that costs $6 per pound. The com LO12-5, L012-6 pany 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