1. Cane Company manufactures two products called Alpha and Beta that sell for $150 and $110, respectively. Each product uses only one type of raw material that costs $5 per pound. The company has the capacity to annually produce 108,000 units of each product. Its unit costs for each product at this level of activity are given below:

Assume that Cane expects to produce and sell 86,000 Alphas during the current year. One of Cane's sales representatives has found a new customer that is willing to buy 16,000 additional Alphas for a price of $104 per unit. If Cane accepts the customer%u2019s offer, how much will its profits increase or decrease?

Net operating income will increase by: $_________

2. Cane Company manufactures two products called Alpha and Beta that sell for $225 and $175, respectively. Each product uses only one type of raw material that costs $6 per pound. The company has the capacity to annually produce 130,000 units of each product. Its unit costs for each product at this level of activity are given below:

Assume that Cane expects to produce and sell 114,000 Alphas during the current year. One of Cane's sales representatives has found a new customer that is willing to buy 29,000 additional Alphas for a price of $156 per unit. If Cane accepts the customer%u2019s offer, it will decrease Alpha sales to regular customers by 13,000 units. What is the amount of incremental net operating income if the order is accepted?

Net operating income decreases by: $__________