The River Otter Corporation is working at full production capacity producing 13,000 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 River Otter to produce 2.500 units of Stronglast, a modification of Everlast. Stronglast would require the same manufacturing processes as Everlast. Apex has offered to pay River Otter $57 for a unit of Stronglast plus half of the marketing cost per unit. Read the requirements Requirements Data Table 1. What is the opportunity cost River Otter of producing the 2,500 units of Stronglast? (Assume that no overtime is worked.) 2. The Chesapeake Corporation has offered to produce 2,500 units of Everlast for River Otter so that River Otter may accept the Apex offer. That is, if River Otter accepts the Chesapeake offer, River Oher would manufacture 10,500 units of Everlast and 2,500 units of Strongias torture Everlast. On the basis of financial considerations alone, and purchase 2,500 units of Everlast from Chesapeake. Chesapeake would charge River Otter $55 per unit ton should River Otter accept the Chesapeake offer? Show your calculations. 3. Suppose River Otter had been working at less than full capacity, producing 10,500 units of Everlast, at the time the Apex offer was made. Calculate the minimum price River Otter should accept for Stronglast under these conditions. (Ignore the previous $57 selling price.) Direct materials S 13 Direct manufacturing labor 2 Manufacturing overhead 31 Total manufacturing cost Manufacturing overhead cost per unit is based on variable cost per unit of $11 and fixed costs of $65,000 (at full capacity of 13,000 units). Marketing cost per unit, all variable, is $6, and the selling price is $62. 16 Print Done Print Done

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