Chec × Ashley Cezto.mheducation.com/hm.tpx?-=0.3967218686745263-1 5 1 1 97806436
ID: 2583104 • Letter: C
Question
Chec × Ashley Cezto.mheducation.com/hm.tpx?-=0.3967218686745263-1 5 1 1 978064366 Required information 1.00 points 3. Assume that Cane expects to produce and sell 80,000 Alphas during the current year. One of Cane's sales representatives has found a new customer that is willing to buy 10,000 additional Alphas for a price of $80 per unit. If Cane accepts the customer's offer, how much will its profits increase or decrease? t operating income by Required Informati orn [The following information appWes to the questions displayed below Cane Company manufactures two products called Alpha and Beta that sell for $120 and $80, respectively. Each product uses only one type of raw material that costs $6 per pound. The company has the capacity to annually produce 100,000 units of each product. Its unit costs for each product at this level of activity are given below: References eBook & Resources Alpha $ 30 20 Beta $ 12 15 Direct materials Direct labor Variable manufacturing overhead Traceable fixed manufacturing overhead Variable selling expenses Common fixed expenses Learning Objective: 12-03 Prepare a make or buy analysis Worksheet 16 12 15 18 Difficulty: 2 Mediunm Learning Objective: 12-04 Prepare an analysis showing whether a special order should be accepted. 10 Learning Objective: 12-02 Prepare an analysis showing whether a product line or other business segment should be added or dropped. Learning Objective: 12-05 Determine the most profitable use of a constrained Total cost per unit $100 $ 68Explanation / Answer
Per unit 10000 units Revenue 80 800000 Expenses: Direct materials 30 300000 Direct labor 20 200000 Variable manufacturing overhead 7 70000 Variable selling expenses 12 120000 Total expenses 69 690000 Net operating income increase 110000