Question
Required: 1 . What is the total amount of traceable fixed manufacturing overhead for each of the two products? 2. What is the companys total
Required:
1. What is the total amount of traceable fixed manufacturing overhead for each of the two products?
2. What is the companys total amount of common fixed expenses?
3. Assume that Star Inc. expects to produce and sell 80,000 Alphas during the current year. One of Star'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 customers order?
4. Assume that Star Inc expects to produce and sell 90,000 Betas during the current year. One of Star'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 customers order?
5. Assume that Star Inc. expects to produce and sell 95,000 Alphas during the current year. One of Star's sales representatives has found a new customer who is willing to buy 10,000 additional Alphas for a price of $80 per unit; however pursuing this opportunity will decrease Alpha sales to regular customers by 5,000 units. What is the financial advantage (disadvantage) of accepting the new customers order?
Star Inc. 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 Alpha Beta 30 12 Direct labor 18 14 Variable overhead Traceable fixed cost 19 8 919 6 10 12 10 10 Variable selling expenses Commom fixed expenses 12 8 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 dollarsStep by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started