5 1 points Print Problem: Module 6 Textbook Problem 5 Learning Objective: 6-3 Make appropriate outsourcing decisions Rundle Company makes and sells lawn mowers for which it currently makes the engines. It has an opportunity to purchase the engines from a reliable manufacturer. The annual costs of making the engines are shown here. Cost of materials (13,900 Units × $29) Labor (13,900 Units x $29) Depreciation on manufacturing equipment* Salary of supervisor of engine production Rental cost of equipment used to make engines Allocated portion of corporate-level facility-sustaining costs Total cost to make 13,900 engines $ 403, 100 403, 100 a. Maximum price per unit b. Maximum price per unit 27,000 78,000 12,000 72,000 $995, 200 *The equipment has a book value of $98,000 but its market value is zero. Required a. Determine the maximum price per unit that Rundle would be willing to pay for the engines. b. Determine the maximum price per unit that Rundle would be willing to pay for the engines, if production increased to 18,150 units. (For all requirements, Round your answers to 2 decimal places.)

FINANCIAL ACCOUNTING
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Chapter1: Financial Statements And Business Decisions
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Module 6 Textbook Problems
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Problem: Module 6 Textbook Problem 5
Learning Objective: 6-3 Make appropriate outsourcing decisions
Rundle Company makes and sells lawn mowers for which it currently makes the engines. It has an opportunity to purchase the engines
from a reliable manufacturer. The annual costs of making the engines are shown here.
Cost of materials (13,900 Units × $29)
Labor (13,900 Units x $29)
Depreciation on manufacturing equipment*
Salary of supervisor of engine production
Rental cost of equipment used to make engines
Allocated portion of corporate-level facility-sustaining costs
Total cost to make 13,900 engines
*The equipment has a book value of $98,000 but its market value is zero.
Required
$ 403, 100
403, 100
a. Maximum price per unit
b. Maximum price per unit
Saved
27,000
78,000
12,000
72,000
$ 995, 200
a. Determine the maximum price per unit that Rundle would be willing to pay for the engines.
b. Determine the maximum price per unit that Rundle would be willing to pay for the engines, if production increased to 18,150 units.
(For all requirements, Round your answers to 2 decimal places.)
Transcribed Image Text:Module 6 Textbook Problems 5 1 points Print Problem: Module 6 Textbook Problem 5 Learning Objective: 6-3 Make appropriate outsourcing decisions Rundle Company makes and sells lawn mowers for which it currently makes the engines. It has an opportunity to purchase the engines from a reliable manufacturer. The annual costs of making the engines are shown here. Cost of materials (13,900 Units × $29) Labor (13,900 Units x $29) Depreciation on manufacturing equipment* Salary of supervisor of engine production Rental cost of equipment used to make engines Allocated portion of corporate-level facility-sustaining costs Total cost to make 13,900 engines *The equipment has a book value of $98,000 but its market value is zero. Required $ 403, 100 403, 100 a. Maximum price per unit b. Maximum price per unit Saved 27,000 78,000 12,000 72,000 $ 995, 200 a. Determine the maximum price per unit that Rundle would be willing to pay for the engines. b. Determine the maximum price per unit that Rundle would be willing to pay for the engines, if production increased to 18,150 units. (For all requirements, Round your answers to 2 decimal places.)
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