The Mountain Lion Corporation is working at full production capacity producing 10,500 units of a unique product, Everlast. Manufacturing cost per unit for Everlast is as follows: (Click the icon to view the cost per unit information.) A customer, the Apex Company, has asked Mountain Lion to produce 3,000 units of Stronglast, a modification of Everlast. Stronglast would require the same manufacturing processes as Everlast. Apex has offered to pay Mountain Lion $55 for a unit of Stronglast plus half of the marketing cost per unit. Read the requirements. Requirement 1. What is the opportunity cost to Mountain Lion of producing the 3,000 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 3,000 units of Stronglast. Selling price per unit Requirements Total variable cost per unit )x )x Units = = Opportunity cost Data table - X 1. What is the opportunity cost to Mountain Lion of producing the 3,000 units of Stronglast? (Assume that no overtime is worked.) 2. The Chesapeake Corporation has offered to produce 3,000 units of Everlast for Mountain Lion so that Mountain Lion may accept the Apex offer. That is, if Mountain Lion accepts the Chesapeake offer, Mountain Lion would manufacture 7,500 units of Everlast and 3,000 units of Stronglast and purchase 3,000 units of Everlast from Chesapeake. Chesapeake would charge Mountain Lion $53 per unit to manufacture Everlast. On the basis of financial considerations alone, should Mountain Lion accept the Chesapeake offer? Show your calculations. 3. Suppose Mountain Lion had been working at less than full capacity, producing 7,500 units of Everlast, at the time the Apex offer was made. Calculate the minimum price Mountain Lion should accept for Stronglast under these conditions. (Ignore the previous $55 selling price.) Direct materials $ 12 Direct manufacturing labor 4 15 Manufacturing overhead $ 31 Total manufacturing cost Manufacturing overhead cost per unit is based on variable cost per unit of $10 and fixed costs of $52,500 (at full capacity of 10,500 units). Marketing cost per unit, all variable, is $2, and the selling price is $62. Print Done Print Done