Question

The Foundational 15

Please provide equation/formula so i know how to solve for. Some screenshot have answer in it but could be wrong. PLEASE IGNORE ANSWER IN THE PICTURE.

Required information The Foundational 15 [L012-2, L012-3, L012-4, LO12-5, LO12-6] [The following information applies to the questions displayed below.) Cane Company manufactures two products called Alpha and Beta that sell for $120 and $80, respectively. Each product uses only one type of raw material that costs $6 per pound. The company has the capacity to annually produce 100,000 units of each product. Its average cost per unit for each product at this level of activity are given below: Alpha $ 30 Beta $ 12 15 5 Direct materials Direct labor Variable manufacturing overhead Traceable fixed manufacturing overhead Variable selling expenses Common fixed expenses Total cost per unit 000 C $100 $ 68 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.

Please provide equation/formula so i know how to solve for. Some screenshot have answer in it but could be wrong. PLEASE IGNORE ANSWER IN THE PICTURE.

Answer 1

Requirement 12-4: Compute financial advantage or disadvantage as follows

Particulars	Amount
Increment revenue per unit (a)	$39.00
Deduct: Incremental costs per unit
Direct materials	$12.00
Direct labor	$15.00
Variable manufacturing overhead	$5.00
Variable selling expense	$8.00
Total incremental costs (b)	$40.00
Incremental loss per unit (a) − (b)	($1.00)
×     Number of units	5,000
Total financial disadvantage	($5,000)

Requirement 12-5a: Compute financial advantage or disadvantage as follows

Particulars	Amount
Incremental revenue (10,000 × $80)	$800,000
Deduct: Incremental variable costs
Direct material (5,000 × $30)	($150,000)
Direct labor (5,000 × $20)	($100,000)
Variable manufacturing overhead (5000 × $7)	($35,000)
Variable selling expenses (5,000 × $12)	($60,000)
Deduct: Sales revenue foregone (5,000 × $120)	($600,000)
Incremental net loss	($145,000)

Requirement 12-5b The company should reject special order as this would result in incremental loss of $145,000.

Requirement 12-8: Compute incremental net operating income as follows

Particulars	Beta	Alpha
Sale Revenue per unit (c)	$80.00	$120.00
Deduct: Variable costs per unit
Direct materials	$12.00	$30.00
Direct labor	$15.00	$20.00
Variable manufacturing overhead	$5.00	$7.00
Variable selling expense	$8.00	$12.00
Total variable cost per unit (d)	$40.00	$69.00
Contribution margin per unit (c) − (d)	$40.00	$51.00
×     Number of units	60,000
Lost contribution margin	($2,400,000)
Add: Traceable fixed manufacturing overhead (100,000 × $18)	$1,800,000
Add: Additional contribution margin (15,000 units × $51 per unit)	$765,000
Incremental net operating income	$165,000

  Requirement 12-9: Compute financial advantage or disadvantage as follows

Particulars	Make	Buy
Cost of outsourced units (80,000 × $80)		$6,400,000
Direct material (80,000 × $30)	$2,400,000
Direct labor (80,000 × $20)	$1,600,000
Variable manufacturing overhead (80,000 × $7)	$560,000
Traceable fixed manufacturing overhead (100,000 × $16)	$1,600,000	_________
Total costs	$6,160,000	$6,400,000
Difference in cost in favor of making($6,400,000 − $6,160,000)	$240,000

  Requirement 12-10: Compute financial advantage or disadvantage as follows

Particulars	Make	Buy
Cost of outsourced units (50,000 × $80)		$4,000,000
Direct material (50,000 × $30)	$1,500,000
Direct labor (50,000 × $20)	$1,000,000
Variable manufacturing overhead (50,000 × $7)	$350,000
Traceable fixed manufacturing overhead (100,000 × $16)	$1,600,000	_________
Total costs	$4,450,000	$4,000,000
Difference in cost in favor of buying($4,450,000 − $4,000,000)	$450,000