CHAPTER END REVIEW Best Sleep Company manufactures two mattress toppers called Alpha and Beta that sell for $210 and $172, respectively. Each product uses only one type of raw material that costs $8 per pound. The company has the capacity to annually produce 128,000 units of each product. Its average cost per unit for each product at this level of activity are given below: Alpha Beta $ 40 24 Direct materials Direct labor 38 34 Variable manufacturing overhead Traceable fixed manufacturing overhead Variable selling expenses Common fixed expenses 25 23 33 36 30 26 33 28 $199 $171 Total cost per unit The company considers its traceable fixed manufacturing overhead to be avoidable, where as its common fixed expenses are unavoidable and have been allocated to products based on sales dollars. 9.ASSUME THAT BEST SLEEP EXPECTS TO PRODUCE AND SELL 98,000 ALPHAS DURING THE CURRENT YEAR. A SUPPLIER HAS OFFERED TO MANUFACTURE AND DELIVER 98,000 ALPHAS TO CANE FOR A PRICE OF $152 PER UNIT. WHAT IS THE FINANCIAL ADVANTAGE (DISADVANTAGE) OF BUYING 98,000 UNITS FROM THE SUPPLIER INSTEAD OF MAKING THOSE UNITS? 10. ASSUME THAT BEST SLEEP EXPECTS TO PRODUCE AND SELL 73,000 ALPHAS DURING THE CURRENT YEAR. A SUPPLIER HAS OFFERED TO MANUFACTURE AND DELIVER 73,000 ALPHAS TO CANE FOR A PRICE OF $152 PER UNIT. WHAT IS THE FINANCIAL ADVANTAGE (DISADVANTAGE) OF BUYING T3,000 UNITS FROM THE SUPPLIER INSTEAD OF MAKING THOSE UNITS? 11. HOW MANY POUNDS OF RAW MATERIAL ARE NEEDED TO MAKE ONE UNIT OF EACH OF THE TWO PRODUCTS