Cane Company manufactures two products called Alpha and Beta that sell for $175 and $135, respectively. Each product uses only one type of raw material that costs $5 per pound. The company has the capacity to annually produce 117,000 units of each product. Its unit costs for each product at this level of activity are given below:

	Alpha				Beta
Direct materials		$	40			$	15
Direct labor			30				30
Variable manufacturing overhead			18				16
Traceable fixed manufacturing overhead			26				29
Variable selling expenses			23				19
Common fixed expenses			26				21
Total cost per unit		$	163			$	130

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.

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 companys total amount of common fixed expenses?

3.Assume that Cane expects to produce and sell 91,000 Alphas during the current year. One of Cane's sales representatives has found a new customer that is willing to buy 21,000 additional Alphas for a price of $124 per unit. If Cane accepts the customers offer, how much will its profits increase or decrease?

Net Operating Income __________by_________

4.Assume that Cane expects to produce and sell 101,000 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 $59 per unit. If Cane accepts the customers offer, how much will its profits increase or decrease?

Net Operating Income __________by_________

5.

Assume that Cane expects to produce and sell 106,000 Alphas during the current year. One of Cane's sales representatives has found a new customer that is willing to buy 21,000 additional Alphas for a price of $124 per unit. If Cane accepts the customers offer, it will decrease Alpha sales to regular customers by 10,000 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 101,000 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 51,000 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 71,000 Betas and 91,000 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? Profit _______by_______ 10. Assume that Cane expects to produce and sell 91,000 Alphas during the current year. A supplier has offered to manufacture and deliver 91,000 Alphas to Cane for a price of $124 per unit. If Cane buys 91,000 units from the supplier instead of making those units, how much will profits increase or decrease? Profit _______by_______ 11.Assume that Cane expects to produce and sell 61,000 Alphas during the current year. A supplier has offered to manufacture and deliver 61,000 Alphas to Cane for a price of $124 per unit. If Cane buys 61,000 units from the supplier instead of making those units, how much will profits increase or decrease? Profit _______by_______