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Cane Company manufactures two products called Alpha and Beta that sell for $140 and $100, respectively. Each product uses only one type of raw material

Cane Company manufactures two products called Alpha and Beta that sell for $140 and $100, respectively. Each product uses only one type of raw material that costs $8 per pound. The company has the capacity to annually produce 106,000 units of each product. Its unit costs for each product at this level of activity are given below:

Alpha Beta
Direct materials $ 32 $ 16
Direct labor 24 19
Variable manufacturing overhead 10 9
Traceable fixed manufacturing overhead 20 22
Variable selling expenses 16 12
Common fixed expenses 19 14
Total cost per unit $ 121 $ 92

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.

Required:

Assume that Cane expects to produce and sell 84,000 Alphas during the current year. One of Cane's sales representatives has found a new customer that is willing to buy 14,000 additional Alphas for a price of $96 per unit. If Cane accepts the customers offer, how much will its profits increase or decrease? (Input the amount as positive value.)

Net operating income (Click to select)Increases/Decreases by $

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