Question: Cane Company manufactures two products called Alpha and Beta that sell for $ 1 9 0 and $ 1 5 5 , respectively. Each product

Cane Company manufactures two products called Alpha and Beta that sell for $190 and $155, respectively. Each product uses only one type of raw material that costs $8 per pound. The company has the capacity to annually produce 122,000 units of each product. Its average cost per unit for each product at this level of activity is given below:
Alpha Beta
Direct materials $ 40 $ 24
Direct labor 3428
Variable manufacturing overhead 2119
Traceable fixed manufacturing overhead 2932
Variable selling expenses 2622
Common fixed expenses 2924
Total cost per unit $ 179 $ 149
The companys 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 expects to produce and sell 104,000 Betas during the current year. One of Canes sales representatives found a new customer willing to buy 3,000 additional Betas for a price of $62 per unit. What is the financial advantage (disadvantage) of accepting the new customer's order?

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