Cane Company manufactures two products called Alpha and Beta that sell for $210 and $172, respectively. Each product uses only one type of raw material that costs $8 per pound. The company has the capacity to annually produce 128,000 units of each product. Its unit costs for each product at this level of activity are given below:

Alpha Beta

Direct materials $ 40 $ 24

Direct labor 38 34

Variable manufacturing overhead 25 23

Traceable fixed manufacturing overhead 33 36

Variable selling expenses 30 26

Common fixed expenses 33 28

Total cost per unit $ 199 $ 171

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:

1. What is the total amount of traceable fixed manufacturing overhead for the Alpha product line and for the Beta product line?

2. What is the companys total amount of common fixed expenses?

3. Assume that Cane expects to produce and sell 98,000 Alphas during the current year. One of Cane's sales representatives has found a new customer that is willing to buy 28,000 additional Alphas for a price of $152 per unit. If Cane accepts the customers offer, how much will its profits increase or decrease?

4. Assume that Cane expects to produce and sell 108,000 Betas during the current year. One of Canes sales representatives has found a new customer that is willing to buy 3,000 additional Betas for a price of $81 per unit. If Cane accepts the customers offer, how much will its profits increase or decrease

5. Assume that Cane expects to produce and sell 113,000 Alphas during the current year. One of Cane's sales representatives has found a new customer that is willing to buy 28,000 additional Alphas for a price of $152 per unit. If Cane accepts the customers offer, it will decrease Alpha sales to regular customers by 13,000 units.

a. Calculate the incremental net operating income if the order is accepted? (Loss amount should be indicated with a minus sign.)

6. Assume that Cane normally produces and sells 108,000 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 58,000 Betas per year. If Cane discontinues the Beta product line, how much will profits increase or decrease?

8. Assume that Cane normally produces and sells 78,000 Betas and 98,000 Alphas per year. If Cane discontinues the Beta product line, its sales representatives could increase sales of Alpha by 11,000 units. If Cane discontinues the Beta product line, how much would profits increase or decrease?