Required Information The Foundational 15(Algo)[LO11-2, LO11-3, LO11-4, LO11-5, LO11-6] [The following information...

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Accounting

Required Information
The Foundational 15(Algo)[LO11-2, LO11-3, LO11-4, LO11-5, LO11-6]
[The following information applies to the questions displayed below.]
Cane Company manufactures two products called Alpha and Beta that sell for $165 and $130, respectively. Each product
uses only one type of raw materlal that costs $8 per pound. The company has the capacity to annually produce 113,000
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 unavoidable and have been allocated to products based on sales dollars.
Foundational 11-8(Algo)
Assume that Cane normally produces and sells 69,000 Betas and 89,000 Alphas per year. If Cane discontinues the Beta product
line, its sales representatives could increase sales of Alpha by 13,000 units. What is the financial advantage (disadvantage) of
discontinuing the Beta product line?
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