Required Information

The Foundational $15($Algo$)[$LO$11-2,$ LO$11-3,$ LO$11-4,$ LO$11-5,$ LO$11-6]$

$[$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 materlal 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:

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.

Foundational $11-8($Algo$)$

Assume that Cane normally produces and sells $69,000$ Betas and $89,000$ Alphas per year. If Cane discontinues the Beta product

line, its sales representatives could increase sales of Alpha by $13,000$ units. What is the financial advantage $($disadvantage$)$ of

discontinuing the Beta product line?