1.
Case summary: Company C manufactures two products: A and B which require only one type of raw material that costs around $6 per pound and the company sells products A and B for $120 and $80 respectively. The company is capable to produce 100,000 units of each product and it considers that its traceable fixed
The total amount of traceable fixed manufacturing overhead for product line A and product line B.
2.
Case summary: Company C manufactures two products: A and B which require only one type of raw material that costs around $6 per pound and the company sells products A and B for $120 and $80 respectively. The company is capable to produce 100,000 units of each product and it considers that its traceable fixed manufacturing costs can be avoidable however, its common fixed expenses are unavoidable.
The total amount of the company’s common fixed expenses.
3.
Case summary: Company C manufactures two products: A and B which require only one type of raw material that costs around $6 per pound and the company sells products A and B for $120 and $80 respectively. The company is capable to produce 100,000 units of each product and it considers that its traceable fixed manufacturing costs can be avoidable however, its common fixed expenses are unavoidable.
The financial advantage of the offer if company C expects to produce and sell 80,000 A during the current year and a new customer is willing to buy 10,000 additional A for a price of $80/unit.
4.
Case summary: Company C manufactures two products: A and B which require only one type of raw material that costs around $6 per pound and the company sells products A and B for $120 and $80 respectively. The company is capable to produce 100,000 units of each product and it considers that its traceable fixed manufacturing costs can be avoidable however, its common fixed expenses are unavoidable.
The financial disadvantage if company C accepts the offer to produce and sell 90,000 B during the current year and a new customer is willing to buy 5,000 additional B for a price of $39/ unit.
5.
Case summary: Company C manufactures two products: A and B which require only one type of raw material that costs around $6 per pound and the company sells products A and B for $120 and $80 respectively. The company is capable to produce 100,000 units of each product and it considers that its traceable fixed manufacturing costs can be avoidable however, its common fixed expenses are unavoidable.
The financial advantage or disadvantage if company C accepts the offer to produce and sell 95,000 A during the current year and a new customer is willing to buy 10,000 additional B for a price of $80/ unit and this offer will decrease A’s sales to regular customers by 5,000 units.
6.
Case summary: Company C manufactures two products: A and B which require only one type of raw material that costs around $6 per pound and the company sells products A and B for $120 and $80 respectively. The company is capable to produce 100,000 units of each product and it considers that its traceable fixed manufacturing costs can be avoidable however, its common fixed expenses are unavoidable.
The financial advantage (disadvantage) of discontinuing B product line if company C normally produces and sells 90,000 B per year.
7.
Case summary: Company C manufactures two products: A and B which require only one type of raw material that costs around $6 per pound and the company sells products A and B for $120 and $80 respectively. The company is capable to produce 100,000 units of each product and it considers that its traceable fixed manufacturing costs can be avoidable however, its common fixed expenses are unavoidable.
The financial advantage (disadvantage) of discontinuing B product line if company C produces and sells 40,000 B per year.
8.
Case summary: Company C manufactures two products: A and B which require only one type of raw material that costs around $6 per pound and the company sells products A and B for $120 and $80 respectively. The company is capable to produce 100,000 units of each product and it considers that its traceable fixed manufacturing costs can be avoidable however, its common fixed expenses are unavoidable.
The financial advantage (disadvantage) of discontinuing B product line if company C increases sales of A by 15,000 units and it normally sells and produces 60,000 B per year and 80,000 A per year.
9.
Case summary: Company C manufactures two products: A and B which require only one type of raw material that costs around $6 per pound and the company sells products A and B for $120 and $80 respectively. The company is capable to produce 100,000 units of each product and it considers that its traceable fixed manufacturing costs can be avoidable however, its common fixed expenses are unavoidable.
The financial advantage (disadvantage) of buying 80,000 units from the supplier instead of manufacturing those units if company C produces and sells 80,000 A during the current year and a supplier offered to manufacture and deliver 80,000 A to Company C for a price of $80/unit.
10.
Case summary: Company C manufactures two products: A and B which require only one type of raw material that costs around $6 per pound and the company sells products A and B for $120 and $80 respectively. The company is capable to produce 100,000 units of each product and it considers that its traceable fixed manufacturing costs can be avoidable however, its common fixed expenses are unavoidable.
The financial advantage (disadvantage) of buying 50,000 units from the supplier instead of manufacturing those units if company C produces and sells 50,000 A during the current year and a supplier offered to manufacture and deliver 80,000 A to Company C for a price of $80/unit.
11.
Case summary: Company C manufactures two products: A and B which require only one type of raw material that costs around $6 per pound and the company sells products A and B for $120 and $80 respectively. The company is capable to produce 100,000 units of each product and it considers that its traceable fixed manufacturing costs can be avoidable however, its common fixed expenses are unavoidable.
The pounds of material which are needed to manufacture one unit of each of the two products A and B.
12.
Case summary: Company C manufactures two products: A and B which require only one type of raw material that costs around $6 per pound and the company sells products A and B for $120 and $80 respectively. The company is capable to produce 100,000 units of each product and it considers that its traceable fixed manufacturing costs can be avoidable however, its common fixed expenses are unavoidable.
The contribution margin per pound of raw material is earned by each of the two products A and B.
13.
Case summary: Company C manufactures two products: A and B which require only one type of raw material that costs around $6 per pound and the company sells products A and B for $120 and $80 respectively. The company is capable to produce 100,000 units of each product and it considers that its traceable fixed manufacturing costs can be avoidable however, its common fixed expenses are unavoidable.
Requirement 13
The units of each product that company C should produce to maximize its profits if the company's raw material available for production is limited to 160,000 pounds and customers would buy a maximum of 80,000 units of A and 60,000 units of B.
14.
Case summary: Company C manufactures two products: A and B which require only one type of raw material that costs around $6 per pound and the company sells products A and B for $120 and $80 respectively. The company is capable to produce 100,000 units of each product and it considers that its traceable fixed manufacturing costs can be avoidable however, its common fixed expenses are unavoidable.
The maximum contribution margin that Company C can earn in the limited quantity of raw materials units of each product if the company's raw material available for production is limited to 160,000 pounds and customers would buy a maximum of 80,000 units of A and 60,000 units of B.
15.
Case summary: Company C manufactures two products: A and B which require only one type of raw material that costs around $6 per pound and the company sells products A and B for $120 and $80 respectively. The company is capable to produce 100,000 units of each product and it considers that its traceable fixed manufacturing costs can be avoidable however, its common fixed expenses are unavoidable.
The amount which company C should be willing to pay per pound for additional raw materials if the company uses its 160,000 pounds of raw materials, the company's raw material available for production is limited to 160,000 pounds and customers would buy a maximum of 80,000 units of A and 60,000 units of B.
Want to see the full answer?
Check out a sample textbook solution
Chapter 6 Solutions
CONNECT ONLINE ACCESS F/MANAGERIAL ACC.
- [The following information applies to the questions displayed below.] Cane Company manufactures two products called Alpha and Beta that sell for $155 and $115, respectively. Each product. uses only one type of raw material that costs $6 per pound. The company has the capacity to annually produce 110,000 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 $24 23 22 23 19 22 $ 133 Beta $ 12 26 12 25 15 17 $ 107 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. 6. Assume that Cane normally produces and sells 97,000 Betas per year. What is the financial advantage (disadvantage) of discontinuing the Beta product line?arrow_forward[The following information applies to the questions displayed below.] 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 is 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 $ 32 $ 16 24 19 10 20 22 16 12 19 14 $ 121 $ 92 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. Assume Cane normally produces and sells 44,000 Betas per year. What is the financial dvantage (disadvantage) of discontinuing the Beta product line?arrow_forward[The following information applies to the questions displayed below.] Cane Company manufactures two products called Alpha and Beta that sell for $210 and $172, respectively. Each product uses only one type of raw material that costs $8 per pound. The company has the capacity to annually produce 128,000 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 Units produced Alpha $ 40 38 25 33 30 33 $ 199 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 dellars. Alpha Beta. $ 24 34 13. Assume that Cane's customers would buy a maximum of 98,000 units of Alpha and 78,000 units of Beta. Also assume that the raw material available for…arrow_forward
- Cane Company manufactures two products called Alpha and Beta that sell for $175 and $135, respectively. Each product uses only one type of raw material that costs $5 per pound. The company has the capacity to annually produce 117,000 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 Total contribution margin $15 30 30 18 16 26 29 23 19 26 21 $ 163 $ 130 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. 14. Assume that Cane's customers would buy a maximum of 91,000 units of Alpha and 71,000 units of Beta. Also assume that the raw material available for production is limited to 225,000 pounds. What is the…arrow_forwardRequired information [The following information applies to the questions displayed below.] Cane Company manufactures two products called Alpha and Beta that sell for $205 and $164, respectively. Each product uses only one type of raw material that costs $8 per pound. The company has the capacity to annually produce 127,000 units of each product. Its unit costs for each product at this level of activity are given below: Direct materials Direct labour Variable manufacturing overhead Traceable fixed manufacturing overhead Variable selling expenses Common fixed expenses Cost per unit Contribution margin per pound Alpha $40 Alpha 37 24 Beta 32 29 32 $194 The company considers its traceable fixed manufacturing overhead to be avoidable, whereas its common fixed expenses are deemed unavoidable and have been allocated to products based on sales dollars. Beta $ 24 30 22 12. What contribution margin per pound of raw material is earned by Alpha and Beta? (Round your answers to 2 decimal places.)…arrow_forwardProduct BW of Blair Designs generates sales revenue of $40,000. The product incurs variable costs of goods sold of $22,000, fixed selling costs of $22,000, and fixed factory overhead of $21,000. Determine if Product BW should be continued or discontinued. Assume that the company will incur the fixed factory overhead regardless of the decision. Support your conclusion with numbers. The fixed selling cost is avoidable.arrow_forward
- Required information [The following information applies to the questions displayed below.] Cane Company manufactures two products called Alpha and Beta that sell for $225 and $175, respectively. Each product uses only one type of raw material that costs $6 per pound. The company has the capacity to annually produce 130,000 units of each product. Its unit costs for each product at this level of activity are given below: Direct materials Direct labour Variable manufacturing overhead Traceable fixed manufacturing overhead Variable selling expenses Common fixed expenses Cost per unit Net operating income Alpha $42 42 26 34 31 34 $209 by The company considers its traceable fixed manufacturing overhead to be avoidable, whereas its common fixed expenses are deemed unavoidable and have been allocated to products based on sales dollars.arrow_forwardRequired information [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 29 15 Pounds of raw materials per unit 25 21 24 $ 154 Alpha 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. Beta 11. How many pounds of raw material are needed to make one unit of each of the two products? $ 24 25 14 27 17 19 $ 126 Betaarrow_forwardRequired information [The following information applies to the questions displayed below.] Cane Company manufactures two products called Alpha and Beta that sell for $185 and $120, respectively. Each product uses only one type of raw material that costs $5 per pound. The company has the capacity to annually produce 112,000 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 $30 Answer is not complete. 22 20 24 20 23 $ 139 Financial advantage Beta $ 10 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. 29 13 26 16 18 $112 8. Assume that Cane normally produces and sells 68,000 Betas and 88,000 Alphas per year. If Cane…arrow_forward
- Required information [The following information applies to the questions displayed below.] Cane Company manufactures two products called Alpha and Beta that sell for $185 and $150, respectively. Each product uses only one type of raw material that costs $8 per pound. The company has the capacity to annually produce 119,000 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 fixed expenses Total cost per unit 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. Alpha Beta $40 $24 33 28 20 11 18 28 31 25 21 28 23 $174 $145 6. Assume that Cane normally produces and sells 103,000 Betas per year. What is the financial advantage (disadvantage) of discontinuing the Beta…arrow_forwardRequired information [The following information applies to the questions displayed below.) Cane Company manufactures two products called Alpha and Beta that sell for $155 and $115, respectively. Each product uses only one type of raw material that costs $6 per pound. The company has the capacity to annually produce 110,000 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 $24 23 22 23 Total contribution margin 19 22 $ 133 Beta $ 12 26 12 25 15 17 $ 107 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. 14. Assume that Cane's customers would buy a maximum of 87,000 units of Alpha and 67,000 units of Beta. Also assume…arrow_forwardABC Company produces a product that currently sells for $72 per unit. Current production costs per unit include the following: Direct materials = $20 Direct labor = $24 Variable overhead = $10 Fixed overhead = $10. Product engineering has determined that a certain portion of the product conversion could be outsourced. Direct labor and variable overhead would be reduced by 50 percent. Raw material would not be affected and no other alternative use for any idle production capacity is apparent. The outsourcing supplier would charge ABC $15 to provide this product conversion. Identify the following relevant costs to process further: What is: Avoidable cost if outsourced = $ per unit Cost to buy = $ per unit Difference in conversion cost = $ per unit Decision to make or buy = (Make/Buy)arrow_forward
AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,
Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSON
Intermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill Education
Financial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education