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Required information Part 8 of 15 The Foundational 15 [LO12-2, L012-3, LO12-4, L012-5, LO12-6 [The following information applies to the questions displayed below.] Cane Company
Required information Part 8 of 15 The Foundational 15 [LO12-2, L012-3, LO12-4, L012-5, LO12-6 [The following information applies to the questions displayed below.] Cane Company manufactures two products called Alpha and Beta that sell for $140 and $100, respectively Each product uses only one type of raw material that costs $8 per pound. The company has the capacity to annually produce 106,000 units of each product. Its average cost per unit for each product at this level of activity are given below: points Skippe Alpha Beta $ 32 $16 19 Direct materials Directlabor Variable manufacturing overhead Traceable fixed manufacturing overhead Variable selling expenses Common fixed expenses Total cost per unit 24 10 20 16 Print Reference 12 14 $121 $92 19 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 Foundational 12-8 8. Assume that Cane normally produces and sells 64,000 Betas and 84,000 Alphas per year. If Cane discontinues the Beta product line, its sales representatives could increase sales of Alpha by 19,000 units. What is the financial advantage (disadvantage) of discontinuing the Beta product line
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