Cane Company manufactures two products called Alpha and Beta that sell for $135 and $95 respectively. Each product uses only one type of raw material that cost $6 per pound. The company has the capacity to annually produce 105,000 units of each product. Its unit costs for each product at the level of activity are given below. Alpha Beta

Direct materials $30 $18

Direct Labor 23 16

Variable manufacturing overhead 10 8

Traceable fixed manufacturing overhead 19 21

Variable selling expenses 15 11

Common fixed expenses 18 13

Total cost per unit $115 $87

The company considers its traceable fixed manufacturing overhead to be available , whereas its common fixed expenses are deemed unavoidable and have been allocated to products based on sales dollars.

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

Traceable fixed manufacturing overhead Alpha Beta

2. What is the company's total amount of common fixed expenses?

Total common fixed expenses___________________

3. Assume that Cane expects to produce and sell 83,000 Alphas during the current year. One of Cane's sales representatives has found a new customer that is willing to buy 13,000 additional Alphas for a price of $92 per unit. If Cane accepts the customer's offer, how much will its profits increase or decrease?

Net operating income_____________by_______________

4. Assume that Cane expects to produce and sell 83,000 Betas during the current year. One of Cane's sales representatives has found a new customer that is willing to buy 4,000 additional Betas for a price of $42 per unit. If Cane accepts the customer's offer, how much will its profits increase or decrease?

Net operating income______________by______________

5.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 13,000 additional Alphas for a price of $92 per unit. If Cane accepts the customer's offer, it will decrease Alpha sales to regular customers by 6,000 units. a. Calculate the incremental net operating income if the order is accepted?

Incremental net operating income_____________________

b. Based on your calculations above should the special order be accepted? yes no

6. Assume that Cane normally produces and sells 93,000 Betas per year. If Cane discontinues the Beta product line, how much will profits increase or decrease?

Profit___________-by_________________

7. Assume that Cane normally produces and sells 43,000 Betas per year. If Cane discontinues the Beta product line, how much will profits increase or decrease?

profit______________by_______________

8 Assume that Cane normally produces and sells 63,000 Betas and 83,000 Alpha per year. If Cane discontinues the Beta product line. Its sales representatives could increase sales of Alpha by 18,000 units. If Cane discontinues the Beta product line, how much would profits increase or decrease?

Profit___________by_________

9. Assume that Cane expects to produce and sell 83,000 Alpha during the current year. A supplier has offered to manufactures and deliver 83,000 Alpha to Cane for a price of $92 per unit. If Cane buys 83,000 units from the supplier instead of making those units, how much will profits increase or decrease?

profit_____-by__________

10. Assume that Cane expects to produce and sell $53,000 Alpha during the current year. A supplier has offered to manufacture and deliver 53,000 Alpha to Canae for a price of $92 per unit. If Cane buys 53,000 units from the supplier instead of making those units, how much will profits increase or decrease?

Profit__________by_____________