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This question is from chapter 12 of Managerial Accounting 16 th edition by Ray Garrison. Required information The Foundational 15 [LO12-2, LO12-3, LO12-4, L012-5, L012-6]
This question is from chapter 12 of Managerial Accounting 16th edition by Ray Garrison.
Required information The Foundational 15 [LO12-2, LO12-3, LO12-4, L012-5, L012-6] [The following information applies to the questions displayed below.] Cane Company manufactures two products called Alpha and Beta that sell for $225 and $175, respectively. Each product uses only one type of raw material that costs $6 per pound. The company has the capacity to annually produce 130,000 units of each product. Its average cost per unit for each product at this level of activity are given below: Alpha Direct materials Directlabor Variable manufacturing overhead Traceable fixed manufacturing overhead Variable selling expenses Common fixed expenses $ 42 42 26 34 31 34 $209 Beta $ 24 32 24 37 27 29 $173 Total cost per unit The company considers its traceable fixed manufacturing overhead to be avoidable, whereas its commorn fixed expenses are unavoidable and have been allocated to products based on sales dollars. 1. What is the total amount of traceable fixed manufacturing overhead for each of the two products? Alpha Beta Traceable fixed manufacturing overhead 3. Assume that Cane expects to produce and sell 99,000 Alphas during the current year. One of Cane's sales representatives has found a new customer who is willing to buy 29,000 additional Alphas for a price of $156 per unit. What is the financial advantage (disadvantage) of accepting the new customer's orderStep by Step Solution
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