Give me correct answer with explanation.s Required informationThe Foundational 15 (Algo) [LO11-2, LO11-3, LO11-4, LO11-5, LO11-6][The following information applies to the questions displayed below.)Cane Company manufactures two products called Alpha and Beta that sell for $130 and $90, respectively. Each productuses only one type of raw material that costs $5 per pound. The company has the capacity to annually produce 102,000units of each product. Its average cost per unit for each product at this level of activity are given below:Direct materialsDirect laborVariable manufacturing overheadTraceable fixed manufacturing overheadVariable selling expensesCommon fixed expensesTotal cost per unitAlpha$ 25Beta$ 102221177182014101712$ 113$ 80The company considers its traceable fixed manufacturing overhead to be avoidable, whereas its common fixed expensesare unavoidable and have been allocated to products based on sales dollars.Foundational 11-7 (Algo)7. Assume that Cane normally produces and sells 42,000 Betas per year. What is the financial advantage (disadvantage) ofdiscontinuing the Beta product line?

To determine the financial advantage or disadvantage of discontinuing the Beta product line, we will…

Answered: Required information The Foundational…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Required information The Foundational 15 (Algo) [LO13-2, LO13-3, LO13-4, LO13-5, LO13-6] 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 average cost per unit 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 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. 12. What contribution margin per pound of raw material is earned by each of the two products? (Round your…
W7 Q9 Federated Manufacturing Incorporated (FMI) produces electronic components in three divisions: industrial, commercial, and consumer products. The commercial products division annually purchases 10,600 units of part 23–6711, which the industrial division produces for use in manufacturing one of its own products. The commercial division is growing rapidly; it is expanding its production and now wants to increase its purchases of part 23–6711 to 15,600 units per year. The problem is that the industrial division is at full capacity. No new investment in the industrial division has been made for some years because top management sees little future growth in its products, so its capacity is unlikely to increase soon. The commercial division can buy part 23–6711 from Advanced Micro Incorporated or from Admiral Electric, a customer of the industrial division now purchasing 680 units of part 88–461. The industrial division's sales to Admiral would not be affected by the commercial…
P10-7 Self-Construction Olson Machine Company manufactures small and large milling machines. Selling prices of these machines range from $35,000 to $200,000. During the 5-month period from August 1, 2019, through December 31, 2019, Olson manufactured a milling machine for its own use. This machine was built as part of the regular production activities. The project required a large amount of time from planning and supervisory person-nel, as well as that of some of the company’s officers, because it was a more sophisticated type of machine than the regular production models. Throughout the 5-month period, Olson charged all costs directly associated with the construction of the machine to a special account entitled “Asset Construction Account.” An analysis of the charges to this account as of December 31, 2019, follows:
Crane Company uses 9000 units of Part A in producing its products. A supplier offers to make Part A for $5. CraneCompany has relevant costs of $8 a unit to manufacture Part A. If there is excess capacity, the relevant cost of buying Part A from the supplier is $72000. $45000. $27000. $0.
ABC Company must decide whether it must continue to produce an engine component or buy it from Engine Co. for P25,000 each. The demand for the coming year is 20 units. The costs of producing a single unit of the engine component are as follows: Direct materials P13,000Direct labor 7,000Factory Overhead (80% fixed) 10,000Total P30,000 If ABC buys the components, the facility now used to make the components can be rented out to another firm for P100,000. REQUIREMENTS: 1. Should ABC make or buy the components? 2. How much is the maximum amount that ABC is willing to pay an outside supplier for the engine component? Pls show solutions per requirement.
11. Rubium Micro Devices currently manufactures a subassembly for its main product. The costs per unit are as follows: Direct materials $54.00 Direct labor 35.00 Variable overhead 40.00 Fixed overhead 34.00 Total $163.00 Crayola Technologies Inc. has contacted Rubium with an offer to sell 6,000 of the subassemblies for $144.00 each. Rubium will eliminate $89,000 of fixed overhead if it accepts the proposal. Should Rubium make or buy the subassemblies? What is the difference between the two alternatives? A) Buy; savings = $89,000 B) Buy; savings = $7,000 C) Make; savings = $1,000 D) Make; savings = $203,000 12. The management accountant for Giada's Book Store has prepared the following income statement for the most current year: Cookbook Travel Book Classics Total Sales $65,000 $164,000 $55,000 $284,000 Cost of goods sold 37,000 67,000 20,000 124,000 Contribution margin 28,000 97,000 35,000 160,000 Order and delivery processing 21,000 25,000 11,000 57,000 Rent (per sq.…
E8-7A Make or Buy Eastside Company incurs a total cost of $120,000 in producing 10,000 units of a component needed in the assembly of its major product. The component can be purchased from an outside supplier for $11 per unit. A related cost study indicates that the total cost of the component includes fixed costs equal to 25% of the variable costs involved. a. Should Eastside buy the component if it cannot otherwise use the released capacity? Present your answer in the form of differential analysis. b. What would be your answer to requirement (a) if the released capacity could be used in a project that would generate $20,000 of contribution margin?
15 Kator Co. is a manufacturer of industrial components. One of their products that is used as a sub-component in auto manufacturing is KB-96. This product has the following financial structure per unit. Selling price P 150 Direct materials P 20Direct labor 15Variable manufacturing overhead 12Fixed manufacturing overhead 30Fixed selling 3Fixed administrative 10 Total costs P 90 Kator Co. has received a one-time special order for 1,000 KB-96 parts. Assuming Kator has excess capacity and the special order customer does not compete with Kator's “regular” customers, the minimum price that is acceptable for this one-time special order is in excess of: Group of answer choices P77. P77 P57 P47. P90. P50.
Ring Company makes telephones. Currently, Ring makes all components of the telephones in-house. An outside company has offered to supply one component, part number X76, for P12 each. Ring uses 22,000 of these components per year. Costs of X76 are as follows: Direct materials, P3.00 Direct labor, P1.50 Variable overhead, P2.75 Fixed overhead, P5.00 Suppose that only 30% of the fixed overhead is unavoidable even if part X76 is not made by Ring. Should Ring purchase the part from the outside supplier? Group of answer choices A. No, income will decrease by P15,000 B. Yes, income will increase by P74,500 C. No, income will decrease by P71,500 D. Yes, income will increase by P10,500 E. No, income will decrease by P27,500 F. No, income will decrease by P10,500
Bruell Electronics Co. is developing a new product, surge protectors for high-voltage electrical flows. The cost information below relates to the product: Unit Costs Direct materials P 3.25 Direct labor 4.00 Distribution 0.75 The company will also be absorbing P120,000 of additional fixed costs associated with this new product. A corporate fixed charge of P20,000 currently absorbed by other products will be allocated to this new product. Bruell is subject to a tax rate of 30%. How many surge protectors (rounded to the nearest hundred) must Bruell Electronics sell at a selling price of P14 per unit to gain P30,000 additional income after taxes?
Stripe Company has been purchasing a component, Part Q, for P19.20 per unit. Stripe is currently operating at 70% of capacity, and no significant increase in production is anticipated in the near future. The cost of manufacturing a unit of Part Q is estimated as follows: Direct materials P11.50 Direct labor 4.50 Variable factory overhead 1.12 Fixed factory overhead 3.15 Total P20.27 Should the company make or buy the component? Prepare a differential analysis report dated March 12 of the current year to support your answer.
Recher Corporation uses part Q89 in one of its products. The company's Accounting Department reports the following costs of producing the 8,200 units of the part that are needed every year. Per Unit Direct materials $ 7.60 Direct labor $ 4.30 Variable overhead $ 8.50 Supervisor's salary $ 3.30 Depreciation of special equipment $ 2.80 Allocated general overhead $ 1.50 An outside supplier has offered to make the part and sell it to the company for $28.00 each. If this offer is accepted, the supervisor's salary and all of the variable costs, including direct labor, can be avoided. The special equipment used to make the part was purchased many years ago and has no salvage value or other use. The allocated general overhead represents fixed costs of the entire company. If the outside supplier's offer were accepted, only $4,600 of these allocated general overhead costs would be avoided. In addition, the space used to produce part Q89 could be used to make more of…

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