Use the information below to answer questions 1-5.
| UNIT COSTS(based on production of 100,000 units of eachproduct). | ALPHA | BETA |
| DIRECTMATERIAL | $24 | $18 |
| DIRECTLABOR | 20 | 16 |
| VARIABLEOVERHEAD | 10 | 6 |
| VARIABLESALES | 10 | 6 |
| TRACEABLEFIXED | 12 | 10 |
| COMMONFIXED COST | 14 | 12 |
| | |
| ADDITIONAL INFORMATION | | |
| SELLINGPRICE PER UNIT | $120 | $80 |
| MATERIALCOST PER POUND | 6 | 6 |
| The company considers its traceable fixed cost to beavoidable. | | |
| whereas its common fixed expenses areunavoidable. | | |
| | |
Required: (Answer each question)
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?
