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The Foundational AlgoLO LO LO LO LO
The following information applles to the questions displayed below.
Cane Company manufactures two products called Alpha and Beta that sell for $ and $ respectively. Each product
uses only one type of raw material that costs $ per pound. The company has the capacity to annually produce
units of each product. Its average cost per unit 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 unavoidable and have been allocated to products based on sales dollars.
Foundational Algo
Assume that Cane expects to produce and sell Alphas during the current year. A supplier has offered to manufacture and
deliver Alphas to Cane for a price of $ per unit. What is the financial advantage disadvantage of buying units from
the supplier instead of making those units?
