Cane Company manufactures two products called Alpha and Beta that sell for $240 and $162, respectively. Each product uses only one type of raw material that costs $5 per pound. The company has the capacity to annually produce 131,000 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 $ 35 $ 15 48 23 27 25 11 35 38 32 28 35 30 $ 212 $ 159 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. ssume that Cane expects to produce and sell 115,000 Alphas during the current year. One of Cane's sales representatives has d a new customer who is willing to buy 30,000 additional Alphas for a price of $160 per unit; however pursuing this opportunity decrease Alpha sales to regular customers by 14,000 units.
Cane Company manufactures two products called Alpha and Beta that sell for $240 and $162, respectively. Each product uses only one type of raw material that costs $5 per pound. The company has the capacity to annually produce 131,000 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 $ 35 $ 15 48 23 27 25 11 35 38 32 28 35 30 $ 212 $ 159 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. ssume that Cane expects to produce and sell 115,000 Alphas during the current year. One of Cane's sales representatives has d a new customer who is willing to buy 30,000 additional Alphas for a price of $160 per unit; however pursuing this opportunity decrease Alpha sales to regular customers by 14,000 units.
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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