Foundational 10-10 Cane Company manufactures two products called Alpha and Beta that sell for $165 and $130, respectively. Each product uses only one type of raw material that costs $8 per pound. The company has the capacity to annually produce 113,000 units of each product. Its unit costs for each product at this level of activity are given below: 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 59,000 Alphas during the current year. A supplier has offered to manufacture and deliver 59,000 Alphas to Cane for a price of $116 per unit. If Cane buys 59,000 units from the supplier instead of making those units, how much will profits increase or decrease? (Input the amount as positive value.) Exercise 10-15 Dropping or Retaining a Segment [L02] Boyle's Home Center, a retailing company, has two departments. Bath and Kitchen. The company's most recent monthly contribution format income statement follows: A study indicates that S380.000 of the fixed expenses being charged to the Bath Department are sunk costs or allocated costs that will continue even if the Bath Department is dropped. In addition, the elimination of the Bath Department would result in a 12% decrease in the sales of the Kitchen Department. Required: If the Bath Department is dropped, what will be the effect on the net operating income of the company as a whole? (Input the amount as a positive value.) Foundational 10-3 Cane Company manufactures two products called Alpha and Beta that sell for $180 and $145, respectively. Each product uses only one type of raw material that costs $6 per pound. The company has the capacity to annually produce 118,000 units of each product. Its unit costs for each product at this level of activity are given below: 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 92,000 Alphas during the current year. One of Cane's sales representatives has found a new customer that is willing to buy 22,000 additional Alphas for a price of S128 per unit. If Cane accepts the customers offer, how much will its profits increase or decrease? (Input the amount as positive value.) Exercise 10-12 Make or Buy a Component [L03] Royal Company manufactures 24,000 units of part R-3 each year for use on its production line. At this level of activity, the cost per unit for part R-3 is: An outside supplier has offered to sell 24,000 units of part R-3 each year to Royal Company for $20.70 per part. If Royal Company accepts this offer, the facilities now being used to manufacture part R-3 could be rented to another company at an annual rental of S83.000. However. Royal Company has determined thatS6 of the fixed manufacturing overhead being applied to part R-3 would continue even if part R-3 were purchased from the outside supplier. Required: What is the total relevant cost of making the product? Total relevant cost of making the product (24,000 units) What is the total relevant cost of buying the product? Total relevant cost of buying the product (24,000 units) What is the opportunity cost of making instead of buying? Total opportunity cost How much profits will increase or decrease if the outside supplier's offer is accepted? (Input the amount as a positive value.) Profits would (Click to select) by Foundational 10-7 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 S5 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: 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 normally produces and sells 42,000 Betas per year. If Cane discontinues the Beta product line, how much will profits increase or decrease? (Input the amount as positive value.) Profit by