Question

Chapter 12 6. Assume that Cane normally produces and sells 90.000 Betas per year. What is the financial advantage (disadvantage) of discontinuing the Beta product line? 7. Assume that Cane normally produces and sells 40.000 Betas per year. What is the financial advantage (disadvantage) of discontinuing the Beta product line? 8. Assume that Cane normally produces and sells 60.000 Betas and 80,000 Alphas per year. If Can discontinues the Beta product line, its sales representatives could increase sales of Alpha by 15 units. What is the financial advantage (disadvantage) of discontinuing the Beta product line? 9. Assume that Cane expects to produce and sell 80,000 Alphas during the current year. A supplies has offered to manufacture and deliver 80,000 Alphas to Cane for a price of $80 per unit. What is the financial advantage (disadvantage) of buying 80,000 units from the supplier instead of making those units? 10. Assume that Cane expects to produce and sell 50,000 Alphas during the current year. A sun. plier has offered to manufacture and deliver 50,000 Alphas to Cane for a price of $80 per unit. What is the financial advantage (disadvantage) of buying 50,000 units from the supplier instead of making those units? 11. How many pounds of raw material are needed to make one unit of each of the two products? 12. What contribution margin per pound of raw material is earned by each of the two products? 13. Assume that Cane's customers would buy a maximum of 80.000 units of Alpha and 60.000 units of Beta. Also assume that the raw material available for production is limited to 160.000 pounds. How many units of each product should Cane produce to maximize its profits? 14. If Cane follows your recommendation in requirement 13, what total contribution margin will it earn? 15. If Cane uses its 160,000 pounds of raw materials as you recommended in requirement 13, up to how much should it be willing to pay per pound for additional raw materials? znect

Answer 1

1.     What is the total amount of traceable fixed manufacturing overhead for the Alpha product line and for the Beta product line?
	Alpha	Beta
Traceable fixed overhead per unit (a)	$15	$18
Level of activity in units (b)	100,000	100,000
Total traceable fixed overhead (a) × (b)	$1,500,000	$1,800,000
2.     What is the company’s total amount of common fixed expenses?
	Alpha	Beta	Total
Common fixed expenses per unit (a)	$15	$10
Level of activity in units (b)	100,000	100,000
Total common fixed expenses (a) × (b)	$1,500,000	$1,000,000	$2,500,000
The company’s total common fixed expenses would be $2,500,000.
3.     Assume that Cane expects to produce and sell 80,000 Alphas during the current year. One of Cane’s sales representatives has found a new customer that is willing to buy 10,000 additional Alphas for a price of $80 per unit. If Cane accepts the customer’s offer, how much will its profits increase or decrease?
	Per Unit	Total
		10,000	units
Incremental revenue	$         80.00	$     800,000.00
Incremental costs:
Variable costs:
Direct materials	$         27.00	$     270,000.00
Direct labor	$         21.00	$     210,000.00
Variable manufacturing overhead	$           9.00	$       90,000.00
Variable selling expenses	$         10.00	$     100,000.00
Total variable cost	$         67.00	$     670,000.00
Incremental net operating income		$     130,000.00
4.     Assume that Cane expects to produce and sell 90,000 Betas during the current year. One of Cane’s sales representatives has found a new customer that is willing to buy 5,000 additional Betas for a price of $39 per unit. If Cane accepts the customer’s offer, how much will its profits increase or decrease?
	Per	Total
		5,000	units
Incremental revenue	$         39.00	$195,000
Incremental costs:
Variable costs:
Direct materials	$           9.00	$       45,000.00
Direct labor	$         18.00	$       90,000.00
Variable manufacturing overhead	$           6.00	$       30,000.00
Variable selling expenses	$           6.00	$       30,000.00
Total variable cost	$         39.00	$     195,000.00
Incremental net operating income		$                    -

Regular price for the customers is missing in the question that's why other questions can't be answered