Required information The Foundational 15 (Algo) [LO13-2, LO13-3, LO13-4, LO13-5, LO13-6] [The following information applies to the questions displayed below.) 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 are given below: Direct materials Alpha $ 30 Beta $ 18 Direct labor 30 25 Variable manufacturing overhead 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 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 13-10 (Algo) 10. Assume that Cane expects to produce and sell 60,000 Alphas during the current year. A supplier has offered to manufacture and deliver 60,000 Alphas to Cane for a price of $120 per unit. What is the financial advantage (disadvantage) of buying 60,000 units from the supplier instead of making those units?
Required information The Foundational 15 (Algo) [LO13-2, LO13-3, LO13-4, LO13-5, LO13-6] [The following information applies to the questions displayed below.) 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 are given below: Direct materials Alpha $ 30 Beta $ 18 Direct labor 30 25 Variable manufacturing overhead 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 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 13-10 (Algo) 10. Assume that Cane expects to produce and sell 60,000 Alphas during the current year. A supplier has offered to manufacture and deliver 60,000 Alphas to Cane for a price of $120 per unit. What is the financial advantage (disadvantage) of buying 60,000 units from the supplier instead of making those units?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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please answer in text form and in proper format answer with must explanation , calculation for each part and steps clearly
![Required information
The Foundational 15 (Algo) [LO13-2, LO13-3, LO13-4, LO13-5, LO13-6]
[The following information applies to the questions displayed below.)
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 are given below:
Direct materials
Alpha
$ 30
Beta
$ 18
Direct labor
30
25
Variable manufacturing overhead
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 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 13-10 (Algo)
10. Assume that Cane expects to produce and sell 60,000 Alphas during the current year. A supplier has offered to manufacture and
deliver 60,000 Alphas to Cane for a price of $120 per unit. What is the financial advantage (disadvantage) of buying 60,000 units from
the supplier instead of making those units?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F85795da2-532c-4378-905b-bfebacc21ff7%2F2d218fe7-9102-4638-b4f4-c8c875db276d%2F8s2vrff_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Required information
The Foundational 15 (Algo) [LO13-2, LO13-3, LO13-4, LO13-5, LO13-6]
[The following information applies to the questions displayed below.)
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 are given below:
Direct materials
Alpha
$ 30
Beta
$ 18
Direct labor
30
25
Variable manufacturing overhead
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 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 13-10 (Algo)
10. Assume that Cane expects to produce and sell 60,000 Alphas during the current year. A supplier has offered to manufacture and
deliver 60,000 Alphas to Cane for a price of $120 per unit. What is the financial advantage (disadvantage) of buying 60,000 units from
the supplier instead of making those units?
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