Cane Company manufactures two products called Alpha and Beta that sell for $170 and $130,...
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Accounting
Cane Company manufactures two products called Alpha and Beta that sell for $170 and $130, respectively. Each product uses only one type of raw material that costs $6 per pound. The company has the capacity to annually produce 116,000 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 unavoldable and have been allocated to products based on sales dollars. Assume that Cane expects to produce and sell 90,000 Alphas during the current year. A supplier has offered to manufacture and elliver 90,000 Alphas to Cane for a price of $120 per unit. What is the financial advantage (disadvantage) of buying 90,000 units fron ne supplier instead of making those units
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