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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 (14,800 Units x $29) Labor (14,800 Units $21) 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 14,800 engines 429,200 310,800 a Maximum price per unit b Maximum price per unit t 29,000 85,000 12,000 87,000 $ 953,000 "The equipment has a book value of $108,000 but its market value is zero. Required 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 18,850 units (For all requirements, Round your answers to 2 decimal places.)

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 (14,800 Units x $29) Labor (14,800 Units $21) 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 14,800 engines 429,200 310,800 a Maximum price per unit b Maximum price per unit t 29,000 85,000 12,000 87,000 $ 953,000 "The equipment has a book value of $108,000 but its market value is zero. Required 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 18,850 units (For all requirements, Round your answers to 2 decimal places.)

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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 (14,800 Units x $29) Labor (14,800 Units x $21): $ 429,200 310,800 29,000 85,000 12,000 87,000 $ 953,000 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 14,800 engines "The equipment has a book value of $108,000 but its market value is zero. Required o. 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 18,850 units (For all requirements, Round your answers to 2 decimal places.) a Maximum price per unit b Maximum price per unit
Transcribed Image Text: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 (14,800 Units x $29) Labor (14,800 Units x $21): $ 429,200 310,800 29,000 85,000 12,000 87,000 $ 953,000 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 14,800 engines "The equipment has a book value of $108,000 but its market value is zero. Required o. 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 18,850 units (For all requirements, Round your answers to 2 decimal places.) a Maximum price per unit b Maximum price per unit
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