xercise 21.3 (Static) Incremental Analysis: Accepting a Special Order (LO21-1, LO21-2, LO21-3) Ison manufactures and sells 5,000 gun cabinets each month. A principal component part in each cabinet is a lock mechanism to eep them secure. Olson's plant currently has the monthly capacity to produce 8,000 lock mechanisms. The costs of manufacturing nese mechanisms at full capacity are as follows. Enter your search term Variable costs per unit: Direct materials 14 Direct labor 12 Variable manufacturing overhead Fixed costs per month: Fixed manufacturing overhead 4 $4 10,000 Security Cases has offered to buy 3,000 lock mechanisms per month from Olson for use in its fireproof cases. Compute the following. a. The average unit cost of manufacturing each lock mechanism assuming that Olson manufactures only enough locks for its own gun cabinets. b. The incremental unit cost of producing one additional lock mechanism. c. The per-unit sales price that Olson should charge to earn $12,000 in monthly pretax profit on sales made to Security Cases. a. Average per-unit manufacturing cost b Incremental unit cost c. Unit sales price < Prev 3 of 5 Next >
xercise 21.3 (Static) Incremental Analysis: Accepting a Special Order (LO21-1, LO21-2, LO21-3) Ison manufactures and sells 5,000 gun cabinets each month. A principal component part in each cabinet is a lock mechanism to eep them secure. Olson's plant currently has the monthly capacity to produce 8,000 lock mechanisms. The costs of manufacturing nese mechanisms at full capacity are as follows. Enter your search term Variable costs per unit: Direct materials 14 Direct labor 12 Variable manufacturing overhead Fixed costs per month: Fixed manufacturing overhead 4 $4 10,000 Security Cases has offered to buy 3,000 lock mechanisms per month from Olson for use in its fireproof cases. Compute the following. a. The average unit cost of manufacturing each lock mechanism assuming that Olson manufactures only enough locks for its own gun cabinets. b. The incremental unit cost of producing one additional lock mechanism. c. The per-unit sales price that Olson should charge to earn $12,000 in monthly pretax profit on sales made to Security Cases. a. Average per-unit manufacturing cost b Incremental unit cost c. Unit sales price < Prev 3 of 5 Next >
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text:xercise 21.3 (Static) Incremental Analysis: Accepting a Special Order (LO21-1, LO21-2, LO21-3)
Ison manufactures and sells 5,000 gun cabinets each month. A principal component part in each cabinet is a lock mechanism to
eep them secure. Olson's plant currently has the monthly capacity to produce 8,000 lock mechanisms. The costs of manufacturing
nese mechanisms at full capacity are as follows.
Enter your search term
Variable costs per unit:
Direct materials
14
Direct labor
12
Variable manufacturing overhead
Fixed costs per month:
Fixed manufacturing overhead
4
$4
10,000
Security Cases has offered to buy 3,000 lock mechanisms per month from Olson for use in its fireproof cases.
Compute the following.
a. The average unit cost of manufacturing each lock mechanism assuming that Olson manufactures only enough locks for its own gun
cabinets.
b. The incremental unit cost of producing one additional lock mechanism.
c. The per-unit sales price that Olson should charge to earn $12,000 in monthly pretax profit on sales made to Security Cases.
a. Average per-unit manufacturing cost
b
Incremental unit cost
c. Unit sales price
< Prev
3 of 5
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