Cane Company manufactures two products called Alpha and Beta that sell for $175
ID: 2472298 • Letter: C
Question
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:
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.
1.What is the total amount of traceable fixed manufacturing overhead for the Alpha product line and for the Beta product line?
Traceable Fixed Manufacturing Overhead (ALPHA) (BETA)
2.What is the company’s total amount of common fixed expenses?
3.Assume that Cane expects to produce and sell 91,000 Alphas during the current year. One of Cane's sales representatives has found a new customer that is willing to buy 21,000 additional Alphas for a price of $124 per unit. If Cane accepts the customer’s offer, how much will its profits increase or decrease?
Net Operating Income __________by_________
4.Assume that Cane expects to produce and sell 101,000 Betas during the current year. One of Cane’s sales representatives has found a new customer that is willing to buy 3,000 additional Betas for a price of $59 per unit. If Cane accepts the customer’s offer, how much will its profits increase or decrease?
Net Operating Income __________by_________
5.
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 that is willing to buy 21,000 additional Alphas for a price of $124 per unit. If Cane accepts the customer’s offer, it will decrease Alpha sales to regular customers by 10,000 units.
Calculate the incremental net operating income if the order is accepted? (Loss amount should be indicated with a minus sign.)
6.Assume that Cane normally produces and sells 101,000 Betas per year. If Cane discontinues the Beta product line, how much will profits increase or decrease? Profit _______by_______
7. Assume that Cane normally produces and sells 51,000 Betas per year. If Cane discontinues the Beta product line, how much will profits increase or decrease?Profit _______by_______
8.Assume that Cane normally produces and sells 71,000 Betas and 91,000 Alphas per year. If Cane discontinues the Beta product line, its sales representatives could increase sales of Alpha by 11,000 units. If Cane discontinues the Beta product line, how much would profits increase or decrease?
Profit _______by_______
10. Assume that Cane expects to produce and sell 91,000 Alphas during the current year. A supplier has offered to manufacture and deliver 91,000 Alphas to Cane for a price of $124 per unit. If Cane buys 91,000 units from the supplier instead of making those units, how much will profits increase or decrease? Profit _______by_______
11.Assume that Cane expects to produce and sell 61,000 Alphas during the current year. A supplier has offered to manufacture and deliver 61,000 Alphas to Cane for a price of $124 per unit. If Cane buys 61,000 units from the supplier instead of making those units, how much will profits increase or decrease? Profit _______by_______
Alpha Beta Direct materials $ 40 $ 15 Direct labor 30 30 Variable manufacturing overhead 18 16 Traceable fixed manufacturing overhead 26 29 Variable selling expenses 23 19 Common fixed expenses 26 21 Total cost per unit $ 163 $ 130Explanation / Answer
Answer:1 The total traceable fixed manufacturing overhead for Alpha and Beta is computed as follows:
Answer:2 The total common fixed expenses is computed as follows:
Answer:3 The profit impact is computed as follows:.
Answer:4
Particulars Alpha Beta Traceable fixed overhead per unit (a) 26 29 Level of activity in units (b) 117000 117000 Total traceable fixed overhead (a)*(b) 3042000 3393000Related Questions
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