John Boyd Corporation manufactures and sells 1,000 tractors each month. The primary component in each tractor is the motor. John Boyd has the monthly capacity to produce 1,300 motors. The variable costs associated with manufacturing each motor are shown below:

Direct materials	$	24
Direct labor	$	16
Variable manufacturing overhead	$	29

Fixed manufacturing overhead per month (for up to 1,300 units of production) averages $27,000. Joan Reid, Inc. has offered to purchase 200 motors from John Boyd per month to be used in its own outboard motors.

1) If Joan Reid's order is rejected, what will be John Boyd 's average unit cost of manufacturing each motor?

• $68 per unit

• $70 per unit

• $96 per unit

• Some other amount

2) What is the incremental cost of producing each additional motor?

Multiple Choice

• $29 per unit

• $69 per unit

• $95 per unit

• Some other amount

3)

Assuming John Boyd wants to earn a pretax profit of $10,000 on this special order, what price must it charge Joan Reid?

Multiple Choice

• $69 per unit

• $83 per unit

• $95 per unit

• $119 per unit