Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Required information The Foundational 15 (Algo) [LO6-2, LO6-3, LO6-4, LO6-5, LO6-6] The following information applies to the questions displayed below Cane Company manufactures two products

image text in transcribedimage text in transcribedimage text in transcribedimage text in transcribedimage text in transcribedimage text in transcribed

Required information The Foundational 15 (Algo) [LO6-2, LO6-3, LO6-4, LO6-5, LO6-6] The following information applies to the questions displayed below Cane Company manufactures two products called Alpha and Beta that sell for $155 and $115, respectively Each product uses only one type of raw material that costs $6 per pound. The company has the capacity to annually produce 110,000 units of each product. Its average cost per unit for each product at this level of activity are given below: Alpha Beta S 12 Direct materials 24 23 Direct labor 26 Variable manufacturing overhead Traceable fixed manufacturing overhead Variable selling expenses Common fixed expenses 22 12 2# 25 19 15 22 17 $107 Total cost per unit $133 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. Foundational 6-5 (Algo) 5. Assume that Cane expects too produce and sell 102,000 Alphas during the current year. One of Cane's sales representatives has found a new customer who is willing to buy 17,000 additional Alphas for a price of $108 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 Req 5A Req SB What is the financial advantage (disadvantage) of accepting the new customer's order? Financial (disadvantage) What contribution margin per pound of raw material is earned by each of the two products? (Round your answers to 2 decimal places.) Alpha Beta Contribution margin per pound 13. Assume that Cane's customers would buy a maximum of 87,000 units of Alpha and 67000 units of Beta. Also assume that the company's raw material available for production is limited to 168,000 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 87,000 units of Alpha and 67,000 units of Beta. Also assume that the company's raw material available for production is limited too 168,000 pounds. What is the maximum contribution margin Cane Company can earn given the limited quantity of raw materials? Total contribution margin 15. Assume that Cane's customers would buy a maximum of 87,000 units of Alpha and 67,000 units of Beta. Also assume that the company's raw material available for production is limited too 168,000 pounds. If Cane uses its 168,000 pounds of raw materials, up to how much should it be willing to pay per pound for additional raw materials? (Round your answer to 2 decimal places.) Maximum price to be paid per pound

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

Step: 3

blur-text-image

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

Tracking Your Trek Looking Backward To Determine Your Forward

Authors: Erica Pauly

1st Edition

979-8839157330

More Books

Students also viewed these Accounting questions

Question

Describe how language reflects, builds on, and determines context?

Answered: 1 week ago