Cane Company manufactures two products called Alpha and Betathat sell for $120 and $80,...

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Accounting

Cane Company manufactures two products called Alpha and Betathat sell for $120 and $80, respectively. Each product uses onlyone type of raw material that costs $6 per pound. The company hasthe capacity to annually produce 100,000 units of each product. Itsaverage cost per unit for each product at this level of activityare given below:
The information in the first paragraph in the text is to be usedto solve problems 1 through 15. The information regarding unitcosts is substituted for the information given below.
                                                                                               ALPHA           BETA
Variable costs:
Directmaterial……………………………………………………$27                 $9
Direct labor………………………………………………………..$21 $18
Variable manufacturing overhead………………………...........$9 $6
Variable selling expenses………………………………….........$10 $6
Total per unit variablecost......................................................$67                  $39
Traceable fixed manufacturing overheadcost.........................$15                 $18
Common fixed cost…………………………………………….....$14 $12
The per unit fixed costs are based on production and sales of100,000 units.

1. What is the total amount of traceable fixed manufacturingoverhead for each of the two products?
2. What is the company’s total amount of common fixedexpenses?
3. Assume that Cane expects to produce and sell 80,000 Alphasduring the current year. One of Cane’s sales representatives hasfound a new customer who is willing to buy 10,000 additional Alphasfor a price of $80 per unit. What is the financial advantage(disadvantage) of accepting the new customer’s order?
4. Assume that Cane expects to produce and sell 90,000 Betasduring the current year. One of Cane’s sales representatives hasfound a new customer who is willing to buy 5,000 additional Betasfor a price of $39 per unit. What is the financial advantage(disadvantage) of accepting the new customer’s order?
5. Assume that Cane expects to produce and sell 95,000 Alphasduring the current year. One of Cane’s sales representatives hasfound a new customer who is willing to buy 10,000 additional Alphasfor a price of $80 per unit; however pursuing this opportunity willdecrease Alpha sales to regular customers by 5,000 units. What isthe financial advantage (disadvantage) of accepting the newcustomer’s order?
6. Assume that Cane normally produces and sells 90,000 Betas peryear. What is the financial advantage (disadvantage) ofdiscontinuing the Beta product line?
7. Assume that Cane normally produces and sells 40,000 Betas peryear. What is the financial advantage (disadvantage) ofdiscontinuing the Beta product line?
8. Assume that Cane normally produces and sells 60,000 Betas and80,000 Alphas per year. If Cane discontinues the Beta product line,its sales representatives could increase sales of Alpha by 15,000units. What is the financial advantage (disadvantage) ofdiscontinuing the Beta product line?
9. Assume that Cane expects to produce and sell 80,000 Alphasduring the current year. A supplier has offered to manufacture anddeliver 80,000 Alphas to Cane for a price of $80 per unit. What isthe financial advantage (disadvantage) of buying 80,000 units fromthe supplier instead of making those units?
10. Assume that Cane expects to produce and sell 50,000 Alphasduring the current year. A supplier has offered to manufacture anddeliver 50,000 Alphas to Cane for a price of $80 per unit. What isthe financial advantage (disadvantage) of buying 50,000 units fromthe supplier instead of making those units?
11. How many pounds of raw material are needed to make one unit ofeach of the two products?
12. What contribution margin per pound of raw material is earned byeach of the two products?
13. Assume that Cane’s customers would buy a maximum of 80,000units of Alpha and 60,000 units of Beta. Also assume that the rawmaterial available for production is limited to 160,000 pounds. Howmany units of each product should Cane produce to maximize itsprofits?
14. If Cane follows your recommendation in requirement 13, whattotal contribution margin will it earn?
15. If Cane uses its 160,000 pounds of raw materials as yourecommended in requirement 13, up to how much should it be willingto pay per pound for additional raw materials?

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1 Amount of traceable fixed manufacturing overhead for each of the two products Average cost for each product is given which is for 100000 units Traceable fixed manufacturing overhead cost for Alpha Traceable fixed manufacturing overhead cost per unit 100000 units 15 100000 units 1500000 Traceable fixed manufacturing overhead cost for beta Traceable fixed manufacturing overhead cost per unit 100000 units 18 100000 units 1800000 2Total amount of common fixed expenses Total amount of common fixed expenses Common fixed expenses cost per unit of Alpha Common fixed expenses cost per unit of Beta 100000 units 14 12 100000 units See Answer

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In: AccountingCane Company manufactures two products called Alpha and Betathat sell for $120 and $80, respectively....Cane Company manufactures two products called Alpha and Betathat sell for $120 and $80, respectively. Each product uses onlyone type of raw material that costs $6 per pound. The company hasthe capacity to annually produce 100,000 units of each product. Itsaverage cost per unit for each product at this level of activityare given below:The information in the first paragraph in the text is to be usedto solve problems 1 through 15. The information regarding unitcosts is substituted for the information given below. ALPHA BETAVariable costs:Directmaterial……………………………………………………$27 $9Direct labor………………………………………………………..$21 $18Variable manufacturing overhead………………………...........$9 $6Variable selling expenses………………………………….........$10 $6Total per unit variablecost......................................................$67 $39Traceable fixed manufacturing overheadcost.........................$15 $18Common fixed cost…………………………………………….....$14 $12The per unit fixed costs are based on production and sales of100,000 units.1. What is the total amount of traceable fixed manufacturingoverhead for each of the two products?2. What is the company’s total amount of common fixedexpenses?3. Assume that Cane expects to produce and sell 80,000 Alphasduring the current year. One of Cane’s sales representatives hasfound a new customer who is willing to buy 10,000 additional Alphasfor a price of $80 per unit. What is the financial advantage(disadvantage) of accepting the new customer’s order?4. Assume that Cane expects to produce and sell 90,000 Betasduring the current year. One of Cane’s sales representatives hasfound a new customer who is willing to buy 5,000 additional Betasfor a price of $39 per unit. What is the financial advantage(disadvantage) of accepting the new customer’s order?5. Assume that Cane expects to produce and sell 95,000 Alphasduring the current year. One of Cane’s sales representatives hasfound a new customer who is willing to buy 10,000 additional Alphasfor a price of $80 per unit; however pursuing this opportunity willdecrease Alpha sales to regular customers by 5,000 units. What isthe financial advantage (disadvantage) of accepting the newcustomer’s order?6. Assume that Cane normally produces and sells 90,000 Betas peryear. What is the financial advantage (disadvantage) ofdiscontinuing the Beta product line?7. Assume that Cane normally produces and sells 40,000 Betas peryear. What is the financial advantage (disadvantage) ofdiscontinuing the Beta product line?8. Assume that Cane normally produces and sells 60,000 Betas and80,000 Alphas per year. If Cane discontinues the Beta product line,its sales representatives could increase sales of Alpha by 15,000units. What is the financial advantage (disadvantage) ofdiscontinuing the Beta product line?9. Assume that Cane expects to produce and sell 80,000 Alphasduring the current year. A supplier has offered to manufacture anddeliver 80,000 Alphas to Cane for a price of $80 per unit. What isthe financial advantage (disadvantage) of buying 80,000 units fromthe supplier instead of making those units?10. Assume that Cane expects to produce and sell 50,000 Alphasduring the current year. A supplier has offered to manufacture anddeliver 50,000 Alphas to Cane for a price of $80 per unit. What isthe financial advantage (disadvantage) of buying 50,000 units fromthe supplier instead of making those units?11. How many pounds of raw material are needed to make one unit ofeach of the two products?12. What contribution margin per pound of raw material is earned byeach of the two products?13. Assume that Cane’s customers would buy a maximum of 80,000units of Alpha and 60,000 units of Beta. Also assume that the rawmaterial available for production is limited to 160,000 pounds. Howmany units of each product should Cane produce to maximize itsprofits?14. If Cane follows your recommendation in requirement 13, whattotal contribution margin will it earn?15. If Cane uses its 160,000 pounds of raw materials as yourecommended in requirement 13, up to how much should it be willingto pay per pound for additional raw materials?