Cane Company manufactures two products called Alpha and Beta that sell for $215 and $160, respectively. Each product uses only one type of raw material that costs $7 per pound. The company has the capacity to annually produce 125,000 units of each product. Its average cost per unit for each product at this level of activity are given below:



Alpha Beta
Direct materials $ 42 $ 21
Direct labor 35 28
Variable manufacturing overhead 23 21
Traceable fixed manufacturing overhead 31 34
Variable selling expenses 28 24
Common fixed expenses 31 26
Total cost per unit $ 190 $ 154


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.

7. Assume that Cane normally produces and sells 56,000 Betas per year. What is the financial advantage (disadvantage) of discontinuing the Beta product line?