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PRORLEM 2 Accepting a Special Onder The Wild Orchid Corporation is working at full production capacity producing 13.000 units of a unique product. Everlast. The
PRORLEM 2 Accepting a Special Onder The Wild Orchid Corporation is working at full production capacity producing 13.000 units of a unique product. Everlast. The projected contribution format income statement for next month (based on full production capacity) is as follows Sales Variable CGS Variable SGEA Contribution margin FMOH FSGEA Net Operating Income S676,000 $260,000 S. 52.000 5364,000 $ 78,000 S $286.000 A customer, the Apex Company, has asked Wild Orchid to produce 3,500 units of Stronglast, a modification of Everlast. Stronglast would require the same manufacturing processes as Everlast Apex has offered to pay Wild Orchid $40 for a unit of Stronglast and share half of the SG&A cost per unit. 1. Calculate the opportunity cost to Wild Orchid of producing the 3,500 units of Stronglast. Contribution 3500 X 28 B The Chesapeake Corporation has offered to produce 3,500 units of Everlast for Wild Orchid so that Wild Orchid may accept the Apex offer. That is, if Wild Orchid accept the Chesapeake offer. Wild Orchid would manufacture 9,500 units of Everlast and 3.500 vnts of Stronglast and purchase 3,500 units of Everlast from Chesapeake. Chesapeake would charge Wila Orchid $36 per unit to manufacture Everlast. If Wild Orchid decides to accept the Chesapeake offer, by how much would Wild Orchid expect NOI to change (don't forget to indicate if this change is an increase or a decrease to NOI)
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