1A- Assume that Cane expects to produce and sell 93,000 Alphas during the current year. One of Cane's sales representatives has found a new customer that is willing to buy 23,000 additional Alphas for a price of $132 per unit. If Cane accepts the customers offer, how much will its profits increase or decrease?

1B-

Assume that Cane expects to produce and sell 108,000 Alphas during the current year. One of Cane's sales representatives has found a new customer that is willing to buy 23,000 additional Alphas for a price of $132 per unit. If Cane accepts the customers offer, it will decrease Alpha sales to regular customers by 12,000 units.

Calculate the incremental net operating income if the order is accepted?

1C- Assume that Cane normally produces and sells 53,000 Betas per year. If Cane discontinues the Beta product line, how much will profits increase or decrease?

Cane Company manufactures two products called Alpha and Beta that sell for $185 and $150, respectively. Each product uses only one type of raw material that costs $8 per pound. The company has the capacity to annually produce 119,000 units of each product. Its unit costs for each product at this level of activity are given below: Direct materials Direct labour Variable manufacturing overhead Traceable fixed manufacturing overhead Variable selling expenses Common fixed expenses Alpha $ 40 33 20 28 25 28 Beta $ 24 28 18 31 21 23 Cost per unit $174 $145 The company considers its traceable fixed manufacturing overhead to be avoidable, whereas its common fixed expenses are deemed unavoidable and have been allocated to products based on sales dollars