Manufacturing overhead cost per unit is based on variable

Reference no: EM13586320

The Wild Boar Corporation is working at full production capacity producing 13,000 units of a unique product, Rosebo. Manufacturing cost per unit for Rosebo is as follows:

Direct materials $5
Direct Manufacturing labor 1
Manufacturing overhead 7
Total manufacturing cost $13

Manufacturing overhead cost per unit is based on variable cost per unit of $4 and fixed costs of $39,000(at full capacity of 13,000 units). Marketing cost per unit, all variable, is $2, and the selling price is $26. A customer, The Miami Company, has asked Wild Boar to produce 3,500 units of Orangebo, a modification of Rosebo. Orangebo would require the same manufactuing processes as Rosebo. Miami has offered to pay Wild Boar $20 per unit of Orangebo and sharee half of the marketing cost per unit.

1. What is the opportunity cost to Wild Boar of producing the 3,500 units of Orangebo?

2.The Buckeye Corporation has offered to produce 3,500 units of Rosebo for Wolverine so that Wild Boar may accept Miami offer. That is, if Wild Boar accepts the Buckeye offer, Wild Boar would manufacture 9,500 units of Rosebo and 3,500 units of Orangebo and pirchase 3,500 units of Rosebo from Buckeye. Buckeye would charge Wild Boar $18 per unit to manufacture Rosebo. On the basis of financial considerations alone, should Wild Boar accept the Buckeye offer? Show your calculations.

3. Suppose Wild Boar had been working at less than full capacity, producing 9,500 units of Rosebo at the time the Miami offer was made. Calculate the minimum price Wild Boar should accept for Orangebo under these conditions.

Reference no: EM13586320

Questions Cloud

Write the molecular formula of glycine an amino acid : question 1 give the numbers of protons and electrons in each of the following a na b ca2 c al3 d i e o2 f n3 and g

Classify the following as an example of a nominal ordinal : 1. classify the following variable as nominal ordinal discrete or continuous and state why it is such a variable

A direct labor worker at cogswell corporation is paid 22 : a direct labor worker at cogswell corporation is paid 22 per hour for regular time and time and a half for all work in

Students will write a 5-8 page research review of an issue : students will write a 5-8 page research review of an issue relevant to young children and play using at least 5

Manufacturing overhead cost per unit is based on variable : the wild boar corporation is working at full production capacity producing 13000 units of a unique product rosebo.

Is the study observational or experimental justify your : an insecticide company exposes 10000 cockroaches to its newest product and exposes another 10000 to their previous

What is the difference between inorganic compounds and : question 1 what is the difference between inorganic compounds and organic compounds?question 2 name the following

The chief cost accountant for sassy beverage co estimated : the chief cost accountant for sassy beverage co. estimated that total factory overhead cost for the blending department

Patsy folson is evaluating what appears to be an attractive : patsy folson is evaluating what appears to be an attractive opportunity. she is currently the owner of a small

User Account

All Pages