1.
Total amount of traceable fixed manufacturing overhead for the Alpha product line = 108000*$22= $2376000
Total amount of traceable fixed manufacturing overhead for the Beta product line = 1080000*$24 = $2592000
.
3:
Contribution margin per unit on special order of alpha= Selling price - Variable cost per unit
Contribution margin per unit on special order of alpha = $104 - ($30+ $26+ $13+ $18) = $17 per unit
.
If Cane accepts the customer’s offer for 16000 alpha, then increase in operating income = 18000 *$17 = $306000
.
Financial advantages = $306000
.
4:
Contribution margin per unit on special order of Beta = Selling price - Variable cost per unit
Contribution margin per unit on special order of Beta = $45 - ($15+ $22+ $11+ $14) = $-17 per unit
.
If Cane accepts the customer’s offer for 2000 beta , then decrease in operating income = 2000 *$17 = $34000
..
Financial disadvantages = $34000
.
5:
.
A.
Regular contribution margin per unit for Alpha = $150 - (($30+ $26+ $13+ $18) = $63 per unit
.
Contribution margin per unit on special order of alpha= Selling price - Variable cost per unit $104 - ($30+ $26+ $13+ $18) = $17 per uni
.
If Cane accepts the customer’s offer for 16000 alpha, additional contribution margin from special order = 16000 * $17 = $306000
.
If Cane accept special order then loss of contribution margin on regular order = 9000 * 63 = 567000
.
Incremental net operating income if the order is accepted = $306000 - $567000 = ($261000)
.
Financial Dis advantages = $261000
.
B.
As there is net financial disadvantage, therefore special order should not be accepted.
.
10.
Differential analysis for Alpha
Direct Materials |
$30 |
Direct Labor |
$26 |
Variable Manufacture Overhead |
$13 |
Unit Variable manufacture Cost |
$69 |
Multiply: Units Normally required |
56000 |
Variable Manufacture Cost for Manufacture |
$3864000 |
Traceable Fixed per unit |
22 |
Multiply: Annual Capacity |
108000 |
Fixed Manufacture Cost for Manufacture |
$2376000 |
Variable Manufacture Cost for Manufacture |
$3864000 |
Fixed Manufacture Cost for Manufacture |
$2376000 |
Total relevant cost for Manufacture |
$6240000 |
Purchase price per unit |
$104 |
Multiply: Units Normally required |
56000 |
Total relevant cost for Purchase |
$5824000 |
Less: Total relevant cost for Manufacture |
$6240000 |
Financial Advantages |
$416000 |
Required information (The following information applies to the questions displayed below.) Cane Company manufactures two products...
Required information (The following information applies to the questions displayed below.) Cane Company manufactures two products called Alpha and Beta that sell for $150 and $110, respectively. Each product uses only one type of raw material that costs $5 per pound. The company has the capacity to annually produce 108,000 units of each product. Its average cost per unit for each product at this level of activity are given below: Direct materials Direct labor Variable manufacturing overhead Traceable fixed manufacturing...
Required information (The following information applies to the questions displayed below.) Cane Company manufactures two products called Alpha and Beta that sell for $150 and $110, respectively. Each product uses only one type of raw material that costs $5 per pound. The company has the capacity to annually produce 108,000 units of each product. Its average cost per unit for each product at this level of activity are given below: Direct materials Direct labor Variable manufacturing overhead Traceable fixed manufacturing...
Required information (The following information applies to the questions displayed below.) Cane Company manufactures two products called Alpha and Beta that sell for $150 and $110, respectively. Each product uses only one type of raw material that costs $5 per pound. The company has the capacity to annually produce 108,000 units of each product. Its average cost per unit for each product at this level of activity are given below: Direct materials Direct labor Variable manufacturing overhead Traceable fixed manufacturing...
Required information [The following information applies to the questions displayed below.] Cane Company manufactures two products called Alpha and Beta that sell for $180 and $145, respectively. Each product uses only one type of raw material that costs $6 per pound. The company has the capacity to annually produce 118,000 units of each product. Its average cost per unit for each product at this level of activity are given below: Beta $ 24 27 Direct materials Direct labor Variable manufacturing...
Required information [The following information applies to the questions displayed below.) Cane Company manufactures two products called Alpha and Beta that sell for $215 and $160, respectively. Each product uses only one type of raw material that costs $7 per pound. The company has the capacity to annually produce 125,000 units of each product. Its average cost per unit for each product at this level of activity are given below: Alpha $ 42 Beta $ 21 28 با Direct materials...
Required information [The following information applies to the questions displayed below.] Cane Company manufactures two products called Alpha and Beta that sell for $215 and $160, respectively. Each product uses only one type of raw material that costs $7 per pound. The company has the capacity to annually produce 125,000 units of each product. Its average cost per unit for each product at this level of activity are given below: Alpha $ 42 Beta $ 21 35 28 21 Direct...
Required Information (The following information applies to the questions displayed below.) Cane Company manufactures two products called Alpha and Beta that sell for $185 and $150, respectively. Each product uses only one type of raw material that costs $8 per pound. The company has the capacity to annually produce 119,000 units of each product. Its average cost per unit for each product at this level of activity are given below: Alpha $ 40 Beta $ 24 28 20 Direct materials...
[The following information applies to the questions displayed below.] Cane Company manufactures two products called Alpha and Beta that sell for $185 and $150, respectively. Each product uses only one type of raw material that costs $8 per pound. The company has the capacity to annually produce 119,000 units of each product. Its average cost per unit for each product at this level of activity are given below: Alpha Beta Direct materials $ 40 $ 24 Direct labor 33 28...
Cane Company manufactures two products called Alpha and Beta that sell for $165 and $130, respectively. Each product uses only one type of raw material 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: Beta $ 24 Alpha $ 40 29 15 Direct materials Direct labor Variable manufacturing overhead Traceable fixed manufacturing overhead Variable selling...
Cane Company manufactures two products called Alpha and Beta that sell for $170 and $130, respectively. Each product uses only one type of raw material that costs $6 per pound. The company has the capacity to annually produce 116,000 units of each product. Its average cost per unit for each product at this level of activity are given below: Alpha Beta Direct materials $ 30 $ 18 Direct labor 30 25 Variable manufacturing overhead 20 15 Traceable fixed manufacturing overhead...