[The following information applies to the questions displayed below. Cane Compan
ID: 2470467 • Letter: #
Question
[The following information applies 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 unit costs 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 Alpha Beta $40 $ 15 30 16 29 19 21 30 18 26 23 26 Total cost per unit $163 $130 The company considers its traceable fixed manufacturing overhead to be avoidable, whereas its common fixed expenses are deemed unavoidable and have been allocated to products based on sales dollars.Explanation / Answer
6)
Contribution Loss (135 – 80) x 101,000
($5,555,000)
Unavoidable Fixed Cost (117,000 x 21)
($2,457,000)
Saving in Avoidable Fixed Cost (117,000 x $29)
$3,393,000
Net Profit Increase /(Decrease)
($4,619,000)
Profit decrease by $4,619,000
7)
Contribution Loss (135 – 80) x 51,000
($2,805,000)
Unavoidable Fixed Cost (117,000 x 21)
($2,457,000)
Saving in Avoidable Fixed Cost (117,000 x $29)
$3,393,000
Net Profit Increase /(Decrease)
($1,869,000)
Profit decrease by $1,869,000
8)
Contribution from Sale of additional units of Alphas
11,000 x (175 – 111)
$1,804,000
Contribution Loss Due to Discontinue of Betas (71,000 x 55)
($3,905,000)
Unavoidable Fixed Cost
($2,457,000)
Saving in Avoidable Fixed Cost
$3,393,000
Net Profit Increase /(Decrease)
($1,165,000)
Profit decrease by $1,165,000
Contribution Loss (135 – 80) x 101,000
($5,555,000)
Unavoidable Fixed Cost (117,000 x 21)
($2,457,000)
Saving in Avoidable Fixed Cost (117,000 x $29)
$3,393,000
Net Profit Increase /(Decrease)
($4,619,000)
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.