The Forest Animal Corporation is working at full production capacity producing 12,500 units of a unique product, Everlast. Manufacturing cost per unit for Everlast is: Direct materials $ 3 Direct manufacturing labor 4 10 Manufacturing overhead $ 17 Total manufacturing cost Manufacturing overhead cost per unit is based on variable cost per unit of $1 and fixed costs of $112,500 (at full capacity of 12,500 units). Marketing cost per unit, all variable, is $2, and the selling price is $34. A customer, the Apex Company, has asked Forest Animal to produce 6,000 units of Stronglast, a modification of Everlast. Stronglast would require the same manufacturing processes as Everlast. Apex has offered to pay Forest Animal $29 for a unit of Stronglast and share half of the marketing cost per unit. Read the requirements. 1. What is the opportunity cost to Forest Animal of producing the 6,000 units of Stronglast? (Assume that no overtime is worked.) 2. The Chesapeake Corporation has offered to produce 6,000 units of Everlast for Forest Animal so that Forest Animal may accept the Apex offer. That is, if Forest Animal accepts the Chesapeake offer, Forest Animal would manufacture 6,500 units of Everlast and 6,000 units of Stronglast and purchase 6,000 units of Everlast from Chesapeake. Chesapeake would charge Forest Animal $22 per unit to manufacture Everlast. On the basis of financial considerations alone, should Forest Animal accept the Chesapeake offer? Show your calculations. 3. Suppose Forest Animal had been working at less than full capacity, producing 6,500 units of Everlast at the time the Apex offer was made. Calculate the minimum price Forest Animal should accept for Stronglast under these conditions. (Ignore the previous $29 selling price.)