The following information applies to the questions displayed below Cane Company

Question

The following information applies to the questions displayed below Cane Company manufactures two products called Alpha and Beta that sell for $215 and $160, respectively. Each product uses only one type of raw material that costs $7 per pound. The company has the capacity to annually produce 125,000 units of each product. Its unit costs for each product at this level of activity are glven below Direct materials Direct labor Variable manufacturing overhead Traceable fixed manufacturing overhead Variable selling expenses Common fixed expenses Alpha Beta $42 $ 21 28 21 34 24 26 35 23 31 28 31 Total cost per unit $190 $154 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. value: 1.00 points 3. Assume that Cane expects to produce and sell 96,000 Alphas during the current year. One of Cane's sales representatives has found a new customer that is willing to buy 26,000 additional Alphas for a price of $144 per unit. If Cane accepts the customer's offer, how much will its profits increase or

Explanation / Answer

Incremental revenue 3744000 Less Incremental variable costs: Direct materials 26000*42 1092000 Direct labor 26000*35 910000 Variable manufacturing overhead 26000*23 598000 Variable selling expenses 26000*28 728000 Net Operating Income Increase by 416000

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

---

---

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