Cane Company manufactures two products called Alpha and Beta that sell for $240 and $162, respectively Each product uses only one type of raw material that costs $5 per pound The company has the capacity to annually produce 131,000 units of each product Its unit costs for each product at this level of activity are given below ALPHA BETA Direct Materials $35 $15 Direct Labor $48 $23 Variable Manufacturing Overhead $27 $25 Traceable fixed manufacturing overhead $35 $38 Variable selling expenses $32 $38 Common fixed expenses $35 $30 Total cost per unit $212 $159 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 9 Assume that Cane expects to produce and sell 100,000 Alphas during the current year A supplier has offered to manufacture and deliver 100,000 Alphas to Cane for a price of $160 per unit If Cane buys 100,000 units from the supplier instead of making those units, how much will profits increase or decrease

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Cane Company manufactures two products called Alpha and Beta that sell for $240 and $162, respectively. Each product uses only one type of raw material

Cane Company manufactures two products called Alpha and Beta that sell for $240 and $162, respectively. Each product uses only one type of raw material that costs $5 per pound. The company has the capacity to annually produce 131,000 units of each product. Its unit costs for each product at this level of activity are given below:

	ALPHA	BETA
Direct Materials	$35	$15
Direct Labor	$48	$23
Variable Manufacturing Overhead	$27	$25
Traceable fixed manufacturing overhead	$35	$38
Variable selling expenses	$32	$38
Common fixed expenses	$35	$30

Total cost per unit	$212	$159

***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.

9. Assume that Cane expects to produce and sell 100,000 Alphas during the current year. A supplier has offered to manufacture and deliver 100,000 Alphas to Cane for a price of $160 per unit. If Cane buys 100,000 units from the supplier instead of making those units, how much will profits increase or decrease?