The Foundational $15($Algo$)[$LO$11-2,$ LO$11-3,$ LO$11-4,$ LO$11-5,$ LO$11-6]$

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

Cane Company manufactures two products called Alpha and Beta that sell for $$175$ and $$135,$ respectively. Each product

uses only one type of raw material that costs $$5$ per pound. The company has the capacity to annually produce $117,000$

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

The company considers its traceable fixed manufacturing overhead to be avoidable, whereas its common fixed expenses

are unavordable and have been allocated to products based on sales dollars.

Foundational $11-5($Algo$)$

Assume that Cane expects to produce and sell $106,000$ Alphas during the current year. One of Cane's sales representatives has

found a new customer who Is willing to buy $21,000$ additional Alphas for a price of $$124$ per unit; however pursuing this opportunity will

decrease Alpha sales to regular customers by $10,000$ 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.

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