Finch 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 (14,300 Units x $13) Labor (14,300 Units x $28) 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 14, 300 engines *The equipment has a book value of $97,000 but its market value is zero. Required $ 185,900 400,400 36,000 66,000 18,000 84,000 $ 790,300 a. Determine the maximum price per unit that Finch would be willing to pay for the engines b. Determine the maximum price per unit that Finch would be willing to pay for the engines, if production increased to 18,550 units (For all requirements. Round your answers to 2 decimal places.) a Maximum price per unit b Maximum price per unit
Finch 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 (14,300 Units x $13) Labor (14,300 Units x $28) 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 14, 300 engines *The equipment has a book value of $97,000 but its market value is zero. Required $ 185,900 400,400 36,000 66,000 18,000 84,000 $ 790,300 a. Determine the maximum price per unit that Finch would be willing to pay for the engines b. Determine the maximum price per unit that Finch would be willing to pay for the engines, if production increased to 18,550 units (For all requirements. Round your answers to 2 decimal places.) a Maximum price per unit b Maximum price per unit
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter2: Basic Cost Management Concepts
Section: Chapter Questions
Problem 11E: Nizam Company produces speaker cabinets. Recently, Nizam switched from a traditional departmental...
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