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Olson manufactures and sells 5,000 gun cabinets each month. A principal component part in each cabinet is a le keep them secure. Olson's plant currently has the monthly capacity to produce 8,000 lock mechanisms. The cos these mechanisms at full capacity are as follows. Variable costs per unit: Direct materials %24 14 Direct labor 12 Variable manufacturing overhead Fixed costs per month: Fixed manufacturing overhead $. 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 enou 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 Average per-unit manufacturing cost a. b. Incremental unit cost C. Unit sales price

Olson manufactures and sells 5,000 gun cabinets each month. A principal component part in each cabinet is a le keep them secure. Olson's plant currently has the monthly capacity to produce 8,000 lock mechanisms. The cos these mechanisms at full capacity are as follows. Variable costs per unit: Direct materials %24 14 Direct labor 12 Variable manufacturing overhead Fixed costs per month: Fixed manufacturing overhead $. 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 enou 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 Average per-unit manufacturing cost a. b. Incremental unit cost C. Unit sales price

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Exercise 21.3 (Static) Incremental Analysis: Accepting a Special Order (LO21-1, LO21-2, L Olson manufactures and sells 5,000 gun cabinets each month. A principal component part in each cabinet is a lo keep them secure. Olson's plant currently has the monthly capacity to produce 8,000 lock mechanisms. The cost these mechanisms at full capacity are as follows. Variable costs per unit: Direct materials Direct labor Variable manufacturing overhead Fixed costs per month: Fixed manufacturing overhead $. 14 12 $. 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 enous 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 a Average per-unit manufacturing cost b. Incremental unit cost C. Unit sales price
Transcribed Image Text:Exercise 21.3 (Static) Incremental Analysis: Accepting a Special Order (LO21-1, LO21-2, L Olson manufactures and sells 5,000 gun cabinets each month. A principal component part in each cabinet is a lo keep them secure. Olson's plant currently has the monthly capacity to produce 8,000 lock mechanisms. The cost these mechanisms at full capacity are as follows. Variable costs per unit: Direct materials Direct labor Variable manufacturing overhead Fixed costs per month: Fixed manufacturing overhead $. 14 12 $. 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 enous 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 a Average per-unit manufacturing cost b. Incremental unit cost C. Unit sales price
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