Please answer all of these fallowing questions
Problem to solve: please help.
Cane Company manufactures two products called Alpha and Beta that sell for $170 and $130, respectively. Each product uses only one type of raw material that costs $6 per pound. The company has the capacity to annually produce 116,000 units of each product. Its average cost per unit for each product at this level of activity is given below:
| Alpha | Beta | |
|---|---|---|
| Direct materials | $ 30 | $ 18 |
| Direct labor | 30 | 25 |
| Variable manufacturing |
20 | 15 |
| Traceable fixed manufacturing overhead | 26 | 28 |
| Variable selling expenses | 22 | 18 |
| Common fixed expenses | 25 | 20 |
| Total cost per unit | $ 153 | $ 124 |
The company’s traceable fixed manufacturing overhead is avoidable, whereas its common fixed expenses are unavoidable and have been allocated to products based on sales dollars.
Please answer all of these fallowing questions:
5. Assume Cane expects to produce and sell 105,000 Alphas during the current year. One of Cane's sales representatives found a new customer willing to buy 20,000 additional Alphas for a price of $120 per unit; however, pursuing this opportunity will decrease Alpha sales to regular customers by 9,000 units.
- What is the financial advantage (disadvantage) of accepting the new customer’s order?
- Based on your calculations above should the special order be accepted?
- Required 5A. financial disadvantage; by how much??????
- Required 5B yes or no
8. Assume Cane normally produces and sells 70,000 Betas and 90,000 Alphas per year. If Cane discontinues the Beta product line, its sales representatives could increase sales of Alpha by 14,000 units. What is the financial advantage (disadvantage) of discontinuing the Beta product line?
financial advantage; by how much????????
13. Assume Cane’s customers would buy a maximum of 90,000 units of Alpha and 70,000 units of Beta. Also assume the raw material available for production is limited to 221,000 pounds. How many units of each product should Cane produce to maximize its profits?
units produced: alpha ?????????? and Beta ????????????????
14. Assume Cane’s customers would buy a maximum of 90,000 units of Alpha and 70,000 units of Beta. Also assume the raw material available for production is limited to 221,000 pounds. What is the total contribution margin Cane Company will earn?
Total Contribution Margin:??????
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