Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Required Information [The following information applies to the questions displayed below) Cane Company manufactures two products called Alpha and Beta that sell for $210 and

image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
Required Information [The following information applies to the questions displayed below) Cane Company manufactures two products called Alpha and Beta that sell for $210 and $172. respectively. Each product uses only one type of raw material that costs $8 per pound. The company has the capacity to annually produce 128,000 units of each product. Its average cost per unit for each product at this level of activity are given below. Alpha 5 4e Beta $ 24 38 34 Direct materials Direct labor Variable manufacturing overhead Traceable fixed manufacturing overhead Variable selling expenses Common fixed expenses 25 28 36 33 30 33 26 28 Total cost per unit $199 5171 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 98.000 Alphas during the current year. One of Cane's sales representatives has found a new customer who is willing to buy 28.000 additional Alphas for a price of $152 per unit. What is the financial advantage (disadvantage) of accepting the new customer's order? 5. Assume that Cane expects to produce and sell 113,000 Alphas during the current year. One of Cane's sales representatives has found a new customer who is willing to buy 28,000 additional Alphas for a price of $152 per unit, however pursuing this opportunity will decrease Alpha sales to regular customers by 13,000 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 Req 5B What is the financial advantage (disadvantage of accepting the new customer's order? IN Reg 58 > 5. Assume that Cane expects to produce and sell 113,000 Alphas during the current year. One of Cane's sales representatives has found a new customer who is willing to buy 28,000 additional Alphas for a price of $152 per unit, however pursuing this opportunity will decrease Alpha sales to regular customers by 13,000 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 Based on your calculations in 5a should the special order be accepted? Yes ONO Req 5A 14. Assume that Cane's customers would buy a maximum of 98,000 units of Alpha and 78,000 units of Beta. Also assume that the raw material available for production is limited to 248,000 pounds. What is the total contribution margin Cane Company will earn? Total contribution margin

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Strategies For Small Audit Shops

Authors: David O'Regan

2nd Edition

0894134701, 978-0894134708

More Books

Students also viewed these Accounting questions