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Cane Company manufactures two products called Alpha and Beta that sell for $$190$ and $$155,$ respectively. Each product uses only one type of raw material that costs $$8$ per pound. The company has the capacity to annually produce $122,000$ units of each product. Its average cost per unit for each product at this level of activity are given below:

Alpha Beta

Direct materials $ $40$ $ $24$

Direct labor $3428$

Variable manufacturing overhead $2119$

Traceable fixed manufacturing overhead $2932$

Variable selling expenses $2622$

Common fixed expenses $2924$

Total cost per unit $ $179$ $ $149$

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.

$8.$ Assume that Cane normally produces and sells $74,000$ Betas and $94,000$ Alphas per year. If Cane discontinues the Beta product line, its sales representatives could increase sales of Alpha by $14,000$ units. What is the financial advantage $($disadvantage$)$ of discontinuing the Beta product line?

PrevQuestion $8$ linked to $910$ up to $15$ of $15$ Total