Chec × Ashley Cezto.mheducation.com/hm.tpx?-=0.3967218686745263-1 5 1 1 97806436
ID: 2583155 • Letter: C
Question
Chec × Ashley Cezto.mheducation.com/hm.tpx?-=0.3967218686745263-1 5 1 1 978064366 Required information 1.00 points 9. Assume that Cane expects to produce and sell 80,000 Alphas during the current year. A supplier has offered to manufacture and deliver 80,000 Alphas to Cane for a price of $80 per unit. If Cane buys 80,000 units from the supplier instead of making those units, how much will profits increase or 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 Difficulty: 2 Medium Learning Objective: 12-04 Prepare an analysis showing whether a special order should be accepted. 16 12 15 18 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 80000 units Expenses to make: Direct materials 30 2400000 Direct labor 20 1600000 Variable manufacturing overhead 7 560000 Total variable expenses 57 4560000 Avoidable fixed costs 1600000 Total production costs 6160000 Purchase cost 80 6400000 Change in profit -240000 Profit decreases by $240000