Required information [The following information applies to the questions displayed below) Cane Company manufactures two products called Alpha and Beta that sell for $150 and $10, respectively. Each product uses only one type of raw material that costs $5 per pound. The company has the capacity to annually produce 108,000 units of each product. Its average cost per unit for each product at this level of activity are given below: Beta Alpha $ 30 26 $ 15 22 11 13 Direct materials Direct labor Variable manufacturing overhead Traceable fixed manufacturing overhead Variable selling expenses Common fixed expenses 22 24 18 14 21 16 $130 $102 Total cost per unit 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. 3. Assume that Cane expects to produce and sell 86,000 Alphas during the current year. One of Cane's sales representatives has found a new customer who is willing to buy 16,000 additional Alphas for a price of 104 per unit. What is the financial advantage (disadvantage) of accepting the new customer's order? 5. Assume that Cane expects to produce and sell 101,000 Alphas during the current year. One of Cane's sales representatives has found a new customer who is willing to buy 16,000 additional Alphas for a price of $104 per unit; however pursuing this opportunity will decrease Alpha sales to regular customers by 9,000 units a What is the financial advantage (disadvantage) of accepting the new customer's order? b. Based on your calculations above should the special order be accepted? Complete this question by entering your answers in the tabs below. Reg SA Reg 58 What is the financial advantage (disadvantage) of accepting the new customer's order? Complete this question by entering your answers in the tabs below- Req 5A Req 5B Based on your calculations in 5a should the special order be accepted? Yes O No 8. Assume that Cane normally produces and sells 66,000 Betas and 86,000 Alphas per year. If Cane discontinues the Beta product line, its sales representatives could increase sales of Alpha by 12,000 units. What is the financial advantage (disadvantage) of discontinuing the Beta product line? 10. Assume that Cane expects to produce and sell 56,000 Alphas during the current year. A supplier has offered to manufacture and deliver 56,000 Alphas to Cane for a price of $104 per unit. What is the financial advantage (disadvantage of buying 56,000 units from the supplier instead of making those units? 13. Assume that Cane's customers would buy a maximum of 86,000 units of Alpha and 66.000 units of Beta. Also assume that the raw material available for production is limited to 210,000 pounds. How many units of each product should Cane produce to maximize its profits? Alpha Beta Units produced 14. Assume that Cane's customers would buy a maximum of 86,000 units of Alpha and 66,000 units of Beta. Also assume that the raw material available for production is limited to 210,000 pounds What is the total contribution margin Cane Company will earn? Total contribution margin
