John Boyd Corporation manufactures and sells 1,000 tractors each month. The primary component in each tractor is the motor. John Boyd has the monthly capacity to produce 1,300 motors. The variable costs associated with manufacturing each motor are shown below: direct materials per unit is $24, direct labor per unit is $16,variable overhead per unit is $29,Fixed manufacturing overhead per month (for up to 1,300 units of production) averages $27,000. Joan Reid, Inc. has offered to purchase 200 motors from John Boyd per month to be used in its own outboard motors. If Joan Reid's order is rejected, what will be John Boyd 's average unit cost of manufacturing each motor? ( )
A. $68.
B. $70.
C. $96.
D. $69
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John Boyd Corporation manufactures and sells 1,000 tractors each month. The primary component in each tractor is the motor. John Boyd has the monthly capacity to produce 1,300 motors. The variable costs associated with manufacturing each motor are shown below: direct materials per unit is $24, direct labor per unit is $16,variable overhead per unit is $29,Fixed manufacturing overhead per month (for up to 1,300 units of production) averages $27,000. Joan Reid, Inc. has offered to purchase 200 motors from John Boyd per month to be used in its own outboard motors. What is the incremental cost of producing each additional motor? ( )
A. $29.
B. $69.
C. $95.
D. $119
John Boyd Corporation manufactures and sells 1,000 tractors each month. The primary component in each tractor is the motor. John Boyd has the monthly capacity to produce 1,300 motors. The variable costs associated with manufacturing each motor are shown below: direct materials per unit is $24, direct labor per unit is $16,variable overhead per unit is $29,Fixed manufacturing overhead per month (for up to 1,300 units of production) averages $27,000. Joan Reid, Inc. has offered to purchase 200 motors from John Boyd per month to be used in its own outboard motors. Assuming John Boyd wants to earn a pretax profit of $10,000 on this special order, what price must it charge Joan Reid? ( )
A. $69.
B. $83.
C. $95.
D. $119
Perry's Cycle Company manufactures annually 20,000 units of TushSeat, a bicycle seat used on many of the company's products, and also sold directly to retailers for $38 per unit. At the current level of production, the cost per unit to produce TushSeat consists of: direct materials per unit is $9, direct labor per unit is $7,variable overhead is per unit $6,and fixed overhead per unit is $3.It has come to the attention of management that a seat of similar quality can be purchased from outside suppliers.Assume that seats can be purchased from the outside supplier at $25 each, and that 60% of total fixed costs incurred in producing TushSeat will be eliminated by this strategy. Buying the seats instead of manufacturing them would cause Perry's operating income to: ( )
A. Decrease by $20,000.
B. Increase by $36,000.
C. Increase by $16,000.
D. Increase by $24,000.
Perry's Cycle Company manufactures annually 20,000 units of TushSeat, a bicycle seat used on many of the company's products, and also sold directly to retailers for $38 per unit. At the current level of production, the cost per unit to produce TushSeat consists of: direct materials per unit is $9, direct labor per unit is $7,variable overhead is per unit $6, and fixed overhead per unit is $3.It has come to the attention of management that a seat of similar quality can be purchased from outside suppliers. If opportunity costs are $10000, Buying the seats instead of manufacturing them would cause Perry's operating income to: ( )
A. Decrease by $34,000.
B. Increase by $30,000.
C. Increase by $16,000.
D. Increase by $14,000.