Required information The following information applies to the questions displayed below] Cane Company manufactures two products called Alpha and Beta that sell for $185 and $150. respectively. Each product uses only one type of raw material that costs $8 per pound. The company has the capacity to annually produce 119,000 units of each product. Its average cost per unit for each product at this level of activity are given below: Direct materials Direct labor Variable manufacturing overhead Traceable fixed manufacturing overhead Variable selling expensou Common fixed expenses Total cost per unit Alpha $40 33 20 28 25 215 $14 Beta $ 24 28 18 31 21 20 $145 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. 6. Assume that cane normally produces and sells 103.000 Betas per year. What is the financial advantage (disadvantage) of discontinuing the Beta product line? Required information {The following information applies to the questions displayed below) Cane Company manufactures two products called Alpha and Beta that sell for $185 and $150. respectively. Each product uses only one type of raw material that costs $8 per pound. The company has the capacity to annually produce 119,000 units of each product. Its average cost per unit for each product at this level of activity are given below: Direct materials Direct labor Variable manufacturing overhead Traceable fixed manufacturing overhead Variable selling expenses Common fixed expenses Total cost per unit Alpha $40 33 20 28 25 211 $174 Beta $24 28 18 31 21 21 $145 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. 7 Assume that cane normally produces and sells 53.000 Betas per year. What is the financial advantage (disadvantage of discontinuing the Beta product line? Required information The following information applies to the questions displayed below) Cane Company manufactures two products called Alpha and Beta that sell for $185 and $150, respectively. Each product uses only one type of raw material that costs $8 per pound. The company has the capacity to annually produce 119,000 units of each product. Its average cost per unit for each product at this level of activity are given below: Direct materials Direct labor Variable manufacturing overhead Traceable fixed manufacturing overhead Variable selling expenses Common fixed expenses Total cost per unit Alpha $40 33 20 28 25 28 $376 leta $ 24 28 18 31 21 22 3145 The company considers its traceable fixed manufacturing overhead to be woldable, whereas its common fed expenses ore unavoidable and have been allocated to products based on sales dollars. 8. Assume that Cane normally produces and sells 73,000 Betas and 93.000 Alphas per year. I Cane discontinues the Beta product line, Its sales representatives could increase sales of Alpha by 13,000 units. What is the financial advantage (disadvantage) of discontinuing the Beta product line
