Required Information The 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 $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: Direct materials Direct labor Variable manufacturing overhead Traceable fixed manufacturing overhead Variable selling expenses Common fixed expenses Total cost per unit Alpha Beta $ 40 $ 24 29 25 15. 14 25 27 21 17 24 19 $ 154 $ 126 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 11-10 (Algo) 10. Assume that Cane expects to produce and sell 59,000 Alphas during the current year. A supplier has offered to manufacture and deliver 59,000 Alphas to Cane for a price of $116 per unit. What is the financial advantage (disadvantage) of buying 59,000 units from the supplier instead of making those units?
Required Information The 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 $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: Direct materials Direct labor Variable manufacturing overhead Traceable fixed manufacturing overhead Variable selling expenses Common fixed expenses Total cost per unit Alpha Beta $ 40 $ 24 29 25 15. 14 25 27 21 17 24 19 $ 154 $ 126 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 11-10 (Algo) 10. Assume that Cane expects to produce and sell 59,000 Alphas during the current year. A supplier has offered to manufacture and deliver 59,000 Alphas to Cane for a price of $116 per unit. What is the financial advantage (disadvantage) of buying 59,000 units from the supplier instead of making those units?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![Required Information
The 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 $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:
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
29
25
15.
14
25
27
21
17
24
19
$ 154 $ 126
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 11-10 (Algo)
10. Assume that Cane expects to produce and sell 59,000 Alphas during the current year. A supplier has offered
to manufacture and deliver 59,000 Alphas to Cane for a price of $116 per unit. What is the financial advantage
(disadvantage) of buying 59,000 units from the supplier instead of making those units?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F5c8552f9-0591-433f-89aa-1eeb43585771%2F9c17f519-2a58-4035-acae-3e896ffea8b1%2Fb8eyq3t_processed.png&w=3840&q=75)
Transcribed Image Text:Required Information
The 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 $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:
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
29
25
15.
14
25
27
21
17
24
19
$ 154 $ 126
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 11-10 (Algo)
10. Assume that Cane expects to produce and sell 59,000 Alphas during the current year. A supplier has offered
to manufacture and deliver 59,000 Alphas to Cane for a price of $116 per unit. What is the financial advantage
(disadvantage) of buying 59,000 units from the supplier instead of making those units?
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