Cane Company manufactures two products called Alpha and Beta that sell for $185 and $120, respectively. Each product uses only one type of raw material that costs $5 per pound. The company has the capacity to annually produce 112,000 units of each product. Its unit costs for each product at this level of activity are given below:

Alpha

Beta

Direct materials

$

30

$

10

Direct labor

22

29

Variable manufacturing overhead

20

13

Traceable fixed manufacturing overhead

24

26

Variable selling expenses

20

16

Common fixed expenses

23

18

Total cost per unit

$

139

$

112

6.	Assume that Cane normally produces and sells 98,000 Betas per year. If Cane discontinues the Beta product line, how much will profits increase or decrease?

7.	Assume that Cane normally produces and sells 48,000 Betas per year. If Cane discontinues the Beta product line, how much will profits increase or decrease?

10.

Assume that Cane expects to produce and sell 58,000 Alphas during the current year. A supplier has offered to manufacture and deliver 58,000 Alphas to Cane for a price of $112 per unit. If Cane buys 58,000 units from the supplier instead of making those units, how much will profits increase or decrease?

11.	How many pounds of raw material are needed to make one unit of Alpha and one unit of Beta?