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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 $225
Required information (The following information applies to the questions displayed below] Cane Company manufactures two products called Alpha and Beta that sell for $225 and $175, respectively. Each product uses only one type of raw material that costs $6 per pound. The company has the capacity to annually produce 130,000 units of each product. Its unit costs for each product at this level of activity are given below: Direct materials Alpha $42 Beta $ 24 Direct labour 42 32 Variable manufacturing overhead 26 24 Traceable fixed manufacturing overhead Variable selling expenses 34 37 31 27 Common fixed expenses 34 29 Cost per unit $209 $173 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 99,000 Alphas during the current year. One of Cane's sales representatives has found a new customer that is willing to buy 29,000 additional Alphas for a price of $156 per unit. If Cane accepts the customer's offer, how much will its profits increase or decrease? Net operating income
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