Chec × Ashley Cezto.mheducation.com/hm.tpx?-=0.3967218686745263-1 5 1 1 97806436
ID: 2583157 • Letter: C
Question
Chec × Ashley Cezto.mheducation.com/hm.tpx?-=0.3967218686745263-1 5 1 1 978064366 10 Required information 1.00 points 10. Assume that Cane expects to produce and sell 50,000 Alphas during the current year. A supplier has offered to manufacture and deliver 50,000 Alphas to Cane for a price of $80 per unit. If Cane buys 50,000 units from the supplier instead of making those units, how much will profits increase or decrease? 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 Worksheet Learning Objective: 12-03 Prepare a make or buy analysis. Beta $ 12 15 Direct materials Direct labor Variable manufacturing overhead Traceable fixed manufacturing overhead Variable selling expenses Common fixed expenses Difficulty: 2 Medium Learning Objective: 12-04 Prepare an analysis showing whether a special order should be accepted 16 12 15 18 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 10 Total cost per unit $100 $ 68Explanation / Answer
Per unit 50000 units Expenses to make: Direct materials 30 1500000 Direct labor 20 1000000 Variable manufacturing overhead 7 350000 Total variable expenses 57 2850000 Avoidable fixed costs 1600000 Total production costs 4450000 Purchase cost 80 4000000 Change in profit 450000 Profit increases by $450000