Question

PLEASE ANSWER ALL THE QUESTION FROM 1-14. NO INCOMPLETE ANSWER PLEASE Cane Company manufactures two products called Alpha and Beta that sell for $140 and $100, respectively. Each product uses only one type of raw material that costs $8 per pound. The company has the capacity to annually produce 106,000 units of each product. Its unit costs for each product at this level of activity are given below:

	Alpha				Beta
Direct materials		$	32			$	16
Direct labor			24				19
Variable manufacturing overhead			10				9
Traceable fixed manufacturing overhead			20				22
Variable selling expenses			16				12
Common fixed expenses			19				14
Total cost per unit		$	121			$	92

1.What is the total amount of traceable fixed manufacturing overhead for the Alpha product line and for the Beta product line?

2.What is the company’s total amount of common fixed expenses?

3.Assume that Cane expects to produce and sell 84,000 Alphas during the current year. One of Cane's sales representatives has found a new customer that is willing to buy 14,000 additional Alphas for a price of $96 per unit. If Cane accepts the customer’s offer, how much will its profits increase or decrease?

4.Assume that Cane expects to produce and sell 94,000 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 $43 per unit. If Cane accepts the customer’s offer, how much will its profits increase or decrease?

5.Assume that Cane expects to produce and sell 99,000 Alphas during the current year. One of Cane's sales representatives has found a new customer that is willing to buy 14,000 additional Alphas for a price of $96 per unit. If Cane accepts the customer’s offer, it will decrease Alpha sales to regular customers by 7,000 units.

a.        

Calculate the incremental net operating income if the order is accepted? (Loss amount should be indicated with a minus sign.)

b.         Based on your calculations above should the special order be accepted?

           

            Yes

            No

6.Assume that Cane normally produces and sells 94,000 Betas per year. If Cane discontinues the Beta product line, how much will profit increase or decrease?

7.Assume that Cane normally produces and sells 44,000 Betas per year. If Cane discontinues the Beta product line, how much will profits increase or decrease?

8.Assume that Cane normally produces and sells 64,000 Betas and 84,000 Alphas per year. If Cane discontinues the Beta product line, its sales representatives could increase sales of Alpha by 19,000 units. If Cane discontinues the Beta product line, how much would profits increase or decrease?

9.Assume that Cane expects to produce and sell 84,000 Alphas during the current year. A supplier has offered to manufacture and deliver 84,000 Alphas to Cane for a price of $96 per unit. If Cane buys 84,000 units from the supplier instead of making those units, how much will profits increase or decrease?

10.Assume that Cane expects to produce and sell 54,000 Alphas during the current year. A supplier has offered to manufacture and deliver 54,000 Alphas to Cane for a price of $96 per unit. If Cane buys 54,000 units from the supplier instead of making those units, how much will profits increase or decrease?

11.How many pounds of raw material are needed to make one unit of Alpha and one unit of Beta?

12.What contribution margin per pound of raw material is earned by Alpha and Beta? (Round your answers to 2 decimal places.)

13.Assume that Cane’s customers would buy a maximum of 84,000 units of Alpha and 64,000 units of Beta. Also assume that the company’s raw material available for production is limited to 166,000 pounds. How many units of each product should Cane produce to maximize its profits?

14. Assume that Cane’s customers would buy a maximum of 84,000 units of Alpha and 64,000 units of Beta. Also assume that the company’s raw material available for production is limited to 166,000 pounds. What is the maximum contribution margin Cane Company can earn given the limited quantity of raw materials?  

PLEASE ANSWER ALL THE QUESTION FROM 1-14. NO INCOMPLETE ANSWER PLEASE

Answer 1

Answer		Amount
1	Total Amount of traceable fixed manufacturing overhead
	For Alpha Product Line (106,000 Units x $20)	$2,120,000
	For Beta Product Line (106,000 Units x $22)	$2,332,000
2	Total Amount of Common Fixed Expenses
	Common Fixed Expenses for Alpha (106,000 Units x $19)	$2,014,000
	Common Fixed Expenses for Beta (106,000 Units x $14)	$1,484,000
	Company's Total Amount of Common Fixed Expenses	$3,498,000
3	If company accept offer of 14,000 additonal Aphas for a price of $96 per unit. Company will incur following variable costs
	Total Variable Cost per Unit ($32+$24+$10+$16)	$82 Per Unit
	Selling Price Per Unit	$96 Per Unit
	Contribution Margin Per Unit ($96 - $82)	$14 Per Unit
	Total Profit will be increased by (14,000 x $14)	$196,000
4	If company accept offer of 5,000 additonal Betas for a price of $43 per unit. Company will incur following variable costs
	Total Variable Cost per Unit ($16+$19+$9+$12)	$56 Per Unit
	Selling Price Per Unit	$43 Per Unit
	Contribution Margin /(Loss) per unit ($43 - $56)	-$13 Per Unit
	Total Profit will be decreased by (5,000 x $13)	$65,000