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The Foundational $15($Algo$)[$L$013-2,$ LO$13-3,$ L$013-4,$ LO$13-5,$ LO$13-6]$

$[$The following information applies to the questions displayed below.$]$

Cane Company manufactures two products called Alpha and Beta that sell for $$190$ and $$155,$ respectively. Each product

uses only one type of raw material that costs $$8$ per pound. The company has the capacity to annually produce $122,000$

units of each product. Its average cost per unit for each product at this level of activity is given below:

The company's traceable fixed manufacturing overhead is avoidable, whereas its common fixed expenses are

unavoidable and have been allocated to products based on sales dollars.

Foundational $13-5($Algo$)$

Assume Cane expects to produce and sell $109,000$ Alphas during the current year. One of Cane's sales representatives found a new

customer willing to buy $24,000$ additional Alphas for a price of $$136$ per unit; however, pursuing this opportunity will decrease Alpha

sales to regular customers by $11,000$ 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?The Foundational $15($Algo$)[$LO$13-2,$ LO$13-3,$ LO$13-4,$ LO$13-5,$ LO$13-6]$

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$[$The following information applies to the questions displayed below.$]$

Cane Company manufactures two products called Alpha and Beta that sell for $$190$ and $$155,$ respectively. Each product uses only one type of raw material that costs $$8$ per pound. The company has the capacity to annually produce $122,000$ units of each product. Its average cost per unit for each product at this level of activity is given below:

Alpha Beta

Direct materials $ $40$ $ $24$

Direct labor $3428$

Variable manufacturing overhead $2119$

Traceable fixed manufacturing overhead $2932$

Variable selling expenses $2622$

Common fixed expenses $2924$

Total cost per unit $ $179$ $ $149$

The company$$s traceable fixed manufacturing overhead is avoidable, whereas its common fixed expenses are unavoidable and have been allocated to products based on sales dollars.

Foundational $13-5($Algo$)$

$5.$ Assume Cane expects to produce and sell $109,000$ Alphas during the current year. One of Cane's sales representatives found a new customer willing to buy $24,000$ additional Alphas for a price of $$136$ per unit; however, pursuing this opportunity will decrease Alpha sales to regular customers by $11,000$ units.

What is the financial advantage $($disadvantage$)$ of accepting the new customer$$s order?

Based on your calculations above should the special order be accepted?