9:41 AM ezto.mheducation.com Verizon LTE 98% [The following information applies

Question

9:41 AM ezto.mheducation.com Verizon LTE 98% [The following information applies to the questions displayed below. Cane Company manufactures two products called Alpha and Beta that sell for $210 and $172, respectively. Each product uses only one type of raw material that costs $8 per pound. The company has the capacity to annually produce 128,000 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 fxed manufacturing overhead Variable selling expenses Common fixed expenses Alpha Beta $40 $24 34 25 36 33 26 Total cost per unit $199 $17 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. 0.66 points Required 1. What is the total amount of traceable fixed manufacturing overhead for the Alpha product line and for the Beta product Traceable foxed manufacturing overhead References eBook & Resources

Explanation / Answer

Note; As per rule I am answering only first 4 parts of this question.

(1).

Alpha

Beta

Traceable fixed manufacturing overhead

$4224000

$4608000

Explanation;

Traceable fixed manufacturing overhead for Alpha ($33 * 128000) = $4224000

Traceable fixed manufacturing overhead for Beta ($36 * 128000) = $4608000

(2).

Total common fixed expenses

$7808000

Explanation;

Common fixed expenses for Alpha ($33 * 128000) = $4224000

Common fixed expenses for Beta ($28 * 128000) = $3584000

Thus total common fixed expenses ($4224000 + $3584000) = $7808000

(3).

Net operating income

Increased

By

$532000

Explanation;

Sales revenues (28000 * $152)

$4256000

Less:

Direct materials (28000 * $40)

($1120000)

Direct labor (28000 * $38)

($1064000)

Variable manufacturing overhead (28000 * $25)

($700000)

Variable selling overheads (28000 * $30)

($840000)

Contribution margin

$532000

Less: Fixed costs

Nil

Net operating income

$532000

(4).

Net operating income

Decreased

By

($78000)

Explanation;

Sales revenues (3000 * $81)

$243000

Less:

Direct materials (3000 * $24)

($72000)

Direct labor (3000 * $34)

($102000)

Variable manufacturing overhead (3000 * $23)

($69000)

Variable selling overheads (3000 * $26)

($78000)

Contribution margin

$532000

Less: Fixed costs

Nil

Net operating loss

($78000)

Alpha

Beta

Traceable fixed manufacturing overhead

$4224000

$4608000

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