Answer and Explanation:
1) Total amount of traceable fixed manufacturing overhead for Alpha and Beta:
Traceable fixed overhead per unit $16 (Alpha) $18 (Beta)
Level of activity 100,000 100,000 units
Total Traceable Fixed Manufacturing 1600000 1800000
Overhead (16 x 100,000) (18 x 100,000)
2) Total amount of common fixed expenses
Common fixed expenses $15 $10
level of activity 100,000 100,000 units
Total common fixed expenses 1500000 1000000
Company's total common fixed expenses = 2500000
3) Alpha
Selling price/ unit $80
DM 30
DL 20
V.MOH 7
V.selling expense 12
Total cost/unit $69
Incremental/unit 11
Increase in profit when order will be accepted = $110,000
4) Beta
Selling price/unit 39
DM 12
DL 15
V.MOH 5
V.selling expense 18
Total cost/unit 50
Incremental loss per unit -11
Decrease in profit when order will be accepted = (55000)
5) Alpha
Selling price/unit $80
DM 30
DL 20
V.MOH 7
V.seling expense 12
Opportunity cost
(120 - 30 - 20 - 7 - 12 = 51 x 5000 = 25.50
255,000 ÷ 10,000)
Total cost per unit 94.50
Loss per unit (14.50)
Increase in profit 145,000
