Question

Prudent Products Corporation manufactures and sells 1,000 motorcycle engines each month. Prudent Products has the monthly capacity to produce 1, 500 oil pumps. The regular sales price of the engines is $180. The variable unit costs associated with manufacturing each engine are shown below: Fixed manufacturing overhead per month (for up to 1, 500 units of production) is $46,000. Volk's Autos, Inc., has offered to purchase 250 engines for a special price of $140 per unit from Prudent Products. Prudent Product's average unit cost of manufacturing each oil pump at the 1,000-unit-per-month production level is $___ per unit. Prudent Product's average unit cost of manufacturing each oil pump at the 1, 250-unit-per-month production level is $___ per unit. The incremental unit cost of producing each additional oil pump is $___ per unit. The amount of increase or decrease (indicate the correct term) that would result from accepting the special order is $___