REQUIREMENT 1.
DROP BOX OPTIONS FOR EQUATION IN REQUIREMENT 1
REQUIREMENT 2.
DROP BOX OPTIONS FOR EQUATION IN REQUIREMENT 2.
REQUIREMENT 3
The Panther Corporation is working at full production capacity producing 11,000 units of a unique product, Everlast. Manufacturing cost per unit for Everlast is: (Click the icon to view the cost per unit information.) A customer, the Apex Company, has asked Panther to produce 2,000 units of Stronglast, a modification of Everlast. Stronglast would require the same manufacturing processes as Everlast. Apex has offered to pay Panther $56 for a unit of Stronglast plus half of the marketing cost per unit. Read the requirements. i X Data Table 16 Direct materials $ 11 Direct manufacturing labor 3 Manufacturing overhead $ 30 Total manufacturing cost Manufacturing overhead cost per unit is based on variable cost per unit of $9 and fixed costs of $77,000 (at full capacity of 11,000 units). Marketing cost per unit, all variable, is $4, and the selling price is $60. Print Done Requirements 1. What is the opportunity cost to Panther of producing the 2,000 units of Stronglast? (Assume that no overtime is worked.) 2. The Chesapeake Corporation has offered to produce 2,000 units of Everlast for Panther so that Panther may accept the Apex offer. That is, if Panther accepts the Chesapeake offer, Panther would manufacture 9,000 units of Everlast and 2,000 units of Stronglast and purchase 2,000 units of Everlast from Chesapeake. Chesapeake would charge Panther $55 per unit to manufacture Everlast. On the basis of financial considerations alone, should Panther accept the Chesapeake offer? Show your calculations. 3. Suppose Panther had been working at less than full capacity, producing 9,000 units of Everlast, at the time the Apex offer was made. Calculate the minimum price Panther should accept for Stronglast under these conditions. (Ignore the previous $56 selling price.) Print Done Requirement 1. What is the opportunity cost to Panther of producing the 2,000 units of Stronglast? (Assume that no overtime is worked.) Determine the formula for calculating the opportunity cost, then calculate the opportunity cost of producing the 2,000 units of Stronglast. Opportunity cost = Direct materials per unit Mfg. overhead per unit Selling price per unit Total fixed costs Total mfg. cost per unit Total variable cost per unit Units Manufacture la Requirement 2. The Chesapeake Corporation has offered to produce 2,000 units of Everlast for Panther so that Panther may accept the Apex offer. That is, if Panther accepts the Chesapeake offer, Panther would manufacture 9,000 units of Everlast and 2,000 units of Stronglast and purchase 2,000 units of Everlast from Chesapeake. Chesapeake would charge Panther $55 per unit to manufacture Everlast. On the basis of financial considerations alone, should Panther accept the Apex offer? Show your calculations. Panther is considering manufacturing 9,000 units of Everlast and 2,000 units of Stronglast and purchasing 2,000 units of Everlast from Chesapeake. Chesapeake would charge Panther $55 per unit to manufacture Everlast. Begin by completing the following table for manufactured Stronglast units and purchased Everlast units. Manufacture Purchase Stronglast Everlast Total selling units On the basis of financial considerations alone, Panther should the Chesapeake offer. Requirement 2. The Chesapeake Corporation has offered to produce 2,000 units of Everlast for Pa 2,000 units of Stronglast and purchase 2,000 units of Everlast from Chesapeake. Chesapeake woul calculations. Panther is considering manufacturing 9,000 units of Everlast and 2,000 units of Stronglast and purc following table for manufactured Stronglast units and purchased Everlast units. Manufacture Purchase Stronglast Everlast Total Contribution margin per unit Direct materials per unit Mfg. overhead per unit Selling price per unit Total fixed costs | Total mfg. cost per unit I Total variable cost per unit Panther should the Chesapeake offer. brking at less than full capacity, producing 9,000 units The minimum selling price would be On the basis of financial considerations alone, Panther should the Chesapeake offer. Requirement 3. Suppose Panther had been working at less tha made. Calculate the minimum price Panther should accept for roducing 9,000 ur these conditions. accept refuse The minimum selling price would be Requirement 3. Suppose Panther had been working at less than full capacity, producing 9,000 units of Everlast, at the time the Apex offer was made. Calculate the minimum price Panther should accept for Stronglast under these conditions. (Ignore the previous $56 selling price.) The minimum selling price would be
