Olson manufactures and sells 5,000 gun cabinets each month. A principal component part in each cabinet is a lock mechanism to keep them secure. Olson's plant currently has the monthly capacity to produce 8,000 lock mechanisms. The costs of manufacturing 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 2$ 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 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

Olson manufactures and sells 5,000 gun cabinets each month. A principal component part in each cabinet is a lock mechanism to keep them secure. Olson's plant currently has the monthly capacity to produce 8,000 lock mechanisms. The costs of manufacturing 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 2$ 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 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

Name: Exercise 21.3 (Static) Incremental Analysis: Accepting a Special Orde
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Description: Exercise 21.3 (Static) Incremental Analysis: Accepting a Special Order (LO21-1, LO21-2, LO21-3)Olson manufactures and sells 5,000 gun cabinets each month. A principal component part in each cabinet is a lock mechanism tokeep them secure. Olson's pla

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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