Cane Company manufactures two products called Alpha and Beta that sell for $140

Question

Cane Company manufactures two products called Alpha and Beta that sell for $140 and $100, respectively. Each product uses only one type of raw material that costs $8 per pound. The company has the capacity to annually produce 106,000 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.

Please explain and show work, the other answers I received were not correct and I can't seem to figure them out! Please help :)

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 that is willing to buy 14,000 additional Alphas for a price of $96 per unit. If Cane accepts the customer’s offer, it will decrease Alpha sales to regular customers by 7,000 unit

Calculate the incremental net operating income if the order is accepted?

6.

Assume that Cane normally produces and sells 94,000 Betas per year. If Cane discontinues the Beta product line, how much will profits increase or decrease?

7

Assume that Cane normally produces and sells 44,000 Betas per year. If Cane discontinues the Beta product line, how much will profits increase or decrease?

8.

Assume that Cane normally produces and sells 64,000 Betas and 84,000 Alphas per year. If Cane discontinues the Beta product line, its sales representatives could increase sales of Alpha by 19,000 units. If Cane discontinues the Beta product line, how much would profits increase or decrease?

9.

Assume that Cane expects to produce and sell 84,000 Alphas during the current year. A supplier has offered to manufacture and deliver 84,000 Alphas to Cane for a price of $96 per unit. If Cane buys 84,000 units from the supplier instead of making those units, how much will profits increase or decrease?

10.Assume that Cane expects to produce and sell 54,000 Alphas during the current year. A supplier has offered to manufacture and deliver 54,000 Alphas to Cane for a price of $96 per unit. If Cane buys 54,000 units from the supplier instead of making those units, how much will profits increase or decrease?

12. What contribution margin per pound of raw material is earned by Alpha and Beta

15. Assume that Cane’s customers would buy a maximum of 84,000 units of Alpha and 64,000 units of Beta. Also assume that the company’s raw material available for production is limited to 166,000 pounds. Up to how much should it be willing to pay per pound for additional raw materials?

Cane Company manufactures two products called Alpha and Beta that sell for $140 and $100, respectively. Each product uses only one type of raw material that costs $8 per pound. The company has the capacity to annually produce 106,000 units of each product. Its unit costs for each product at this level of activity are given below:

Explanation / Answer

Cane Company ($) ($) Alpha Beta Direct Materials 32 16 Direct Labor 24 19 Variable Manufacturing Overhead 10 9 Traceable fixed manufacturing overhead (Avoidable) 20 22 Variable selling expenses 16 12 Common fixed expenses (Unavoidable) 19 14 Total cost per unit 121 92 Selling Price 140 100 Annual Capacity (Units) 106000 106000 Calculation of Profit/Unit Alpha Beta Selling Price 140 100 Less: Variable expenses Direct materials 32 16 Direct labor 24 19 Variable Mfg Overhead 10 9 Variable selling exp 16 12 Contribution 58 44 Less: Traceable fixed Mfg Overhead (avoidable) 20 22 Profit Per Unit 38 22 Total Cost Per Unit (Variable+Fixed) 102 78

Related Questions

Navigate

• Browse (All)
• Browse C
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.