.' Required information [The following information applies to the questions displayed below] P 5 HO Cane Company manufactures two products called Alpha and Beta that
.' Required information [The following information applies to the questions displayed below] P 5 HO Cane Company manufactures two products called Alpha and Beta that sell for $150 and $105, respectively. Each product a\" 0 uses only one type of raw material that costs $5 per pound. The company has the capacity to annually produce 107,000 units of each product. Its unit costs for each product at this level of activity are given below: 10 Alpha Beta ' Direct materials $ 36 $ 16 pomts Direct labour 25 20 Variable manufacturing overhead 12 16 Traceable fixed manufacturing overhead 21 23 eBook Variable selling expenses 17 13 Common Fixed expenses 26 15 References Cost per' unit $125 $ 91 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. L 5. Assume that Cane expects to produce and sell 100,000 Alphas during the current year. One of Cane's sales representatives has found a new customer that is willing to buy 15000 additional Alphas for a price of $100 per unit. If Cane accepts the customer's offer, it will decrease Alpha sales to regular customers by 8,000 units. 3. Calculate the incremental net operating income if the order is accepted? (Loss amount should be indicated with a minus sign.)
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