Cane Company manufactures two products called Alpha and Beta that sell for $130 and $90, respectively. Each product uses only one type of raw material that costs $5 per pound. The company has the capacity to annually produce 102,000 units of each product. Its unit costs for each product at this level of activity are given below:

	Alpha				Beta
Direct materials		$	25			$	10
Direct labor			22				21
Variable manufacturing overhead			17				7
Traceable fixed manufacturing overhead			18				20
Variable selling expenses			14				10
Common fixed expenses			17				12
Total cost per unit		$	113			$	80

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?

3.

Assume that Cane expects to produce and sell 82,000 Alphas during the current year. One of Cane's sales representatives has found a new customer that is willing to buy 12,000 additional Alphas for a price of $88 per unit. If Cane accepts the customers offer, how much will its profits increase or decrease?

4.

Assume that Cane expects to produce and sell 92,000 Betas during the current year. One of Canes sales representatives has found a new customer that is willing to buy 2,000 additional Betas for a price of $41 per unit. If Cane accepts the customers offer, how much will its profits increase or decrease?

5.

Assume that Cane expects to produce and sell 97,000 Alphas during the current year. One of Cane's sales representatives has found a new customer that is willing to buy 12,000 additional Alphas for a price of $88 per unit. If Cane accepts the customers offer, it will decrease Alpha sales to regular customers by 7,000 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 92,000 Betas per year. If Cane discontinues the Beta product line, how much will profits increase or decrease?

7.

Assume that Cane normally produces and sells 42,000 Betas per year. If Cane discontinues the Beta product line, how much will profits increase or decrease?

8.	Assume that Cane normally produces and sells 62,000 Betas and 82,000 Alphas per year. If Cane discontinues the Beta product line, its sales representatives could increase sales of Alpha by 17,000 units. If Cane discontinues the Beta product line, how much would profits increase or decrease?