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Cane Company manufactures two products called Alpha and Beta that sell for $215 and $160, respectively. Each product uses only one type of raw material

Cane Company manufactures two products called Alpha and Beta that sell for $215 and $160, respectively. Each product uses only one type of raw material that costs $7 per pound. The company has the capacity to annually produce 125,000 units of each product. Its unit costs for each product at this level of activity are given below:

Alpha Beta
Direct materials $ 42 $ 21
Direct labor 35 28
Variable manufacturing overhead 23 21
Traceable fixed manufacturing overhead 31 34
Variable selling expenses 28 24
Common fixed expenses 31 26
Total cost per unit $ 190 $ 154

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:

Assume that Cane expects to produce and sell 71,000 Alphas during the current year. A supplier has offered to manufacture and deliver 71,000 Alphas to Cane for a price of $144 per unit. If Cane buys 71,000 units from the supplier instead of making those units, how much will profits increase or decrease? (Input the amount as positive value.)

Profit (Click to select)IncreasesDecreases by $

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