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Required information [The following information applies to the questions displayed below] Cane Company manufactures two products called Alpha and Beta that sell for $240
Required information [The following information applies to the questions displayed below] Cane Company manufactures two products called Alpha and Beta that sell for $240 and $162, respectively. Each product uses only one type of raw material that costs $5 per pound. The company has the capacity to annually produce 131,000 units of each product. Its unit costs for each product at this level of activity are given below: Direct materials Alpha $35 Beta $ 15 Direct labour 48 23 Variable manufacturing overhead 27 25 Traceable fixed manufacturing overhead Variable selling expenses 35 38 32 28 Common fixed expenses 35 30 Cost per unit $212 $159 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. 3. Assume that Cane expects to produce and sell 100,000 Alphas during the current year. One of Cane's sales representatives has found a new customer that is willing to buy 30,000 additional Alphas for a price of $160 per unit. If Cane accepts the customer's offer, how much will its profits increase or decrease? Net operating income by
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