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[The following information applies to the questions displayed below.] Cane Company manufactures two products called Alpha and Beta that sell for $135 and $95, respectively.

[The following information applies to the questions displayed below.]

Cane Company manufactures two products called Alpha and Beta that sell for $135 and $95, respectively. Each product uses only one type of raw material that costs $6 per pound. The company has the capacity to annually produce 105,000 units of each product. Its unit costs for each product at this level of activity are given below:

Alpha Beta
Direct materials $ 30 $ 18
Direct labor 23 16
Variable manufacturing overhead 10 8
Traceable fixed manufacturing overhead 19 21
Variable selling expenses 15 11
Common fixed expenses 18 13
Total cost per unit $ 115 $ 87

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.

5.

Assume that Cane expects to produce and sell 98,000 Alphas during the current year. One of Cane's sales representatives has found a new customer that is willing to buy 13,000 additional Alphas for a price of $92 per unit. If Cane accepts the customers offer, it will decrease Alpha sales to regular customers by 6,000 units.

a.

Calculate the incremental net operating income if the order is accepted?(Loss amount should be indicated with a minus sign.)

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