80.2K

Verified Solution

Link Copied!

Cane Company manufactures two products called Alpha and Beta that sell for $125 and $85, respectively. Each product uses only one type of raw material that costs $6 per pound. The company has the capacity to annually produce 101,000 units of each product. Its unit costs for each product at this level of activity are given below: Alpha Beta Direct materials $ 30 $ 12 Direct labor 21 20 Variable manufacturing overhead 8 6 Traceable fixed manufacturing overhead 17 19 Variable selling expenses 13 9 Common fixed expenses 16 11 Total cost per unit $ 105 $ 77 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? Alpha Beta Traceable fixed manufacturing overhead

2.	What is the companys total amount of common fixed expenses?

	Total common fixed expenses

3.

Assume that Cane expects to produce and sell 81,000 Alphas during the current year. One of Cane's sales representatives has found a new customer that is willing to buy 11,000 additional Alphas for a price of $84 per unit. Net operating income increases by 4. Assume that Cane expects to produce and sell 91,000 Betas during the current year. One of Canes sales representatives has found a new customer that is willing to buy 6,000 additional Betas for a price of $40 per unit. If Cane accepts the customers offer, how much will its profits increase or decrease? Net operating income decreases by

Answer & Explanation Solved by verified expert

See Answer