Question 1. (25 marks) The Wild Orchid Corporation is working at full production capacity producing 13,000 units of a unique product, Everlast. Manufacturing cost per unit for Everlast is: $ Direct materials 10 $ Variable direct manufacturing labour Manufacturing overhead 2 14 $ Total manufacturing cost 26 Manufacturing overhead cost per unit is based on variable cost per unit of $8 and fixed costs of $78,000 (at full capacity of 13,000 units). Marketing cost per unit, all variable, is $4, and the selling price is $52. 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 marketing cost per unit. 1. What is the opportunity cost to Wild Orchid of producing the 3,500 units of Stronglast? (Assume that na overtime is worked J.S.) O AUCYMRook quire the same manufacturing processes Orchid $40 for a unit of Stonelast and share half of the marketing conde 1. What is the opportunity cost to Wild Orchid of producing the 3,500 units of Some the no overtime is worked.) 2. The Chesapeake Corporation has offered to produce 3,500 units of Everlast for Wild Orched so that Wild Orchid may accept the Apex offer. That is, if Wild Orchid accepts the Chesapeake ofter, Wild Orchid would manufacture 9,500 units of Everlast and 3,500 units of Stronglast and purchase 3,500 units of Everlast from Chesapeake. Chesapeake would charge Wild Orchid $36 per unit to manufacture Everlast On the basis of financial considerations alone, should Wild Orchid accept the Chesapeake offer? Show your calculations