Travers Corporation is working at full production capacity producing 10,000 units of a unique product, RST. Manufacturing costs per unit for RST follow:
The unit manufacturing overhead cost is based on a variable cost per unit of $2 and fixed costs of $30,000 (at full capacity of 10,000 units). The non-manufacturing costs, all variable, are $4 per unit, and the selling price is $20 per unit. A customer, Blanding Company, has asked Travers to produce 2,000 units of a modification of RST to be called XYZ. XYZ would require the same manufacturing processes as RST. Blanding Company has offered to share equally the non-manufacturing costs with Travers. XYZ will sell at $15 per unit.
Required:

Question

Travers Corporation is working at full production capacity producing 10,000 units of a unique product, RST. Manufacturing costs per unit for RST follow:
  The unit manufacturing overhead cost is based on a variable cost per unit of $2 and fixed costs of $30,000 (at full capacity of 10,000 units). The non-manufacturing costs, all variable, are $4 per unit, and the selling price is $20 per unit. A customer, Blanding Company, has asked Travers to produce 2,000 units of a modification of RST to be called XYZ. XYZ would require the same manufacturing processes as RST. Blanding Company has offered to share equally the non-manufacturing costs with Travers. XYZ will sell at $15 per unit.
Required:

Quizplus · Accepted Answer

The Answer of Travers Corporation is working at full production capacity producing 10,000 units of a unique product, RST. Manufacturing costs per unit for RST follow:
  The unit manufacturing overhead cost is based on a variable cost per unit of $2 and fixed costs of $30,000 (at full capacity of 10,000 units). The non-manufacturing costs, all variable, are $4 per unit, and the selling price is $20 per unit. A customer, Blanding Company, has asked Travers to produce 2,000 units of a modification of RST to be called XYZ. XYZ would require the same manufacturing processes as RST. Blanding Company has offered to share equally the non-manufacturing costs with Travers. XYZ will sell at $15 per unit.
Required:

Travers Corporation Is Working at Full Production Capacity Producing 10,000