Cane Company manufactures two products called Alpha and Beta that sell for $205 and $164, respectively. Each product uses only one type of raw material that costs $8 per pound. The company has the capacity to annually produce 127,000 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 overhead Variable selling expenses Common fixed expenses Total cost per unit Alpha $ 40 Beta $ 24 37 30 24 22 32 35 29 25 32 27 $ 194 $ 163 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. Foundational 11-4 (Algo) 4. Assume that Cane expects to produce and sell 107,000 Betas during the current year. One of Cane's sales representatives has found a new customer who is willing to buy 4,000 additional Betas for a price of $80 per unit. What is the financial advantage (disadvantage) of accepting the new customer's order?

Cane Company manufactures two products called Alpha and Beta that sell for $205 and $164, respectively. Each product uses only one type of raw material that costs $8 per pound. The company has the capacity to annually produce 127,000 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 overhead Variable selling expenses Common fixed expenses Total cost per unit Alpha $ 40 Beta $ 24 37 30 24 22 32 35 29 25 32 27 $ 194 $ 163 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. Foundational 11-4 (Algo) 4. Assume that Cane expects to produce and sell 107,000 Betas during the current year. One of Cane's sales representatives has found a new customer who is willing to buy 4,000 additional Betas for a price of $80 per unit. What is the financial advantage (disadvantage) of accepting the new customer's order?

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter5: Process Costing

Section: Chapter Questions

Problem 2PB: The following product costs are available for Kellee Company on the production of eyeglass frames:...

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