Cane Company manufactures two products called Alpha and Beta that sell for $125 and $85, respectively. Each product uses only one type of raw material that costs $6 per pound. The company has the capacity to annually produce 101,000 units of each product. Its average cost per unit for each product at this level of activity are given below:

	Alpha				Beta
Direct materials		$	30			$	12
Direct labor			21				20
Variable manufacturing overhead			8				6
Traceable fixed manufacturing overhead			17				19
Variable selling expenses			13				9
Common fixed expenses			16				11
Total cost per unit		$	105			$	77

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 41,000 Betas per year. What is the financial advantage (disadvantage) of discontinuing the Beta product line?

9. Assume that Cane expects to produce and sell 81,000 Alphas during the current year. A supplier has offered to manufacture and deliver 81,000 Alphas to Cane for a price of $84 per unit. What is the financial advantage (disadvantage) of buying 81,000 units from the supplier instead of making those units?