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 average cost per unit 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				28
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 unavoidable and have been allocated to products based on sales dollars.

1. Assume that Cane expects to produce and sell 110,000 Betas during the current year. One of Canes sales representatives has found a new customer who is willing to buy 2,000 additional Betas for a price of $83 per unit. What is the financial advantage (disadvantage) of accepting the new customer's order?

2. Assume that Cane normally produces and sells 110,000 Betas per year. What is the financial advantage (disadvantage) of discontinuing the Beta product line?

3. 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. What is the financial advantage (disadvantage) of buying 100,000 units from the supplier instead of making those units?

4. How many pounds of raw material are needed to make one unit of each of the two products?

5. What contribution margin per pound of raw material is earned by each of the two products? (Round your answers to 2 decimal places.) (alpha and beta)

6. Assume that Canes customers would buy a maximum of 100,000 units of Alpha and 80,000 units of Beta. Also assume that the companys raw material available for production is limited to 261,000 pounds. How many units of each product should Cane produce to maximize its profits?