Cane Company manufactures two products called Alpha and Beta that sell for $195 and $150, respectively. Each product uses only one type of raw material that costs $5 per pound. The company has the capacity to annually produce 123,000 units of each product. Its average cost per unit for each product at this level of activity are given below:

	Alpha	Beta
Direct materials	$ 40	$ 15
Direct labor	34	28
Variable manufacturing overhead	22	20
Traceable fixed manufacturing overhead	30	33
Variable selling expenses	27	23
Common fixed expenses	30	25
Total cost per unit	$ 183	$ 144

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 70,000 Alphas during the current year. A supplier has offered to manufacture and deliver 70,000 Alphas to Cane for a price of $140 per unit. What is the financial advantage (disadvantage) of buying 70,000 units from the supplier instead of making those units?
2. What contribution margin per pound of raw material is earned by each of the two products? (Round your answers to 2 decimal places.)
3. Assume that Cane expects to produce and sell 95,000 Alphas during the current year. One of Cane's sales representatives has found a new customer who is willing to buy 25,000 additional Alphas for a price of $140 per unit. What is the financial advantage (disadvantage) of accepting the new customer's order?
4. Assume that Cane expects to produce and sell 110,000 Alphas during the current year. One of Cane's sales representatives has found a new customer who is willing to buy 25,000 additional Alphas for a price of $140 per unit; however, pursuing this opportunity will decrease Alpha sales to regular customers by 12,000 units.
1. What is the financial advantage (disadvantage) of accepting the new customers order?
2. Based on your calculations above should the special order be accepted?