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Required information [ The following information applies to the questions displayed below. ] Abel Company manufactures two products called Deluxe and Regular that sell for
Required information
The following information applies to the questions displayed below.
Abel Company manufactures two products called Deluxe and Regular that sell for $ and $ respectively. Each product
uses only one type of raw material that costs $ per kilogram. The company has the capacity to annually produce
units of each product. Its unit costs for each product at this level of activity are given below:
The company considers its traceable fixed manufacturing overhead to be avoidable, whereas its common fixed expenses
are deemed unavoidable and have been allocated to products based on sales dollars.
Required:
What is the total amount of traceable fixed manufacturing overhead for the Deluxe product line and for the Regular product line?
What is the company's total amount of common fixed expenses?
Total common fixed expenses
Assume that Abel expects to produce and sell Deluxe units during the current year. One of Abel's sales representatives has
found a new customer who is willing to buy additional units of Deluxe for a price of $ per unit. If Abel accepts the customer's
offer, how much will its profits increase or decrease?
Assume that Abel normally produces and sells Regular units and Deluxe units per year. If Abel discontinues the
Regular product line, its sales representatives could increase sales of Deluxe by units. If Abel discontinues the Regular product
line, how much would profits increase or decrease?
Assume that Abel expects to produce and sell Deluxe units during the current year. A supplier has offered to manufacture
and deliver Deluxe units to Abel for a price of $ per unit. If Abel buys units from the supplier instead of making those
units, how much will profits increase or decrease?
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