Zachary Company makes and sells lawn mowers for which it currently makes the engines. It has an opportunity to purchase theengines from a reliable manufacturer. The annual costs of making the engines are shown here.$ 272,000Cost of materials (13,600 Units x $20)Labor (13,600 Units x $30)Depreciation on manufacturing equipment*Salary of supervisor of engine productionRental cost of equipment used to make enginesAllocated portion of corporate-level facility-sustaining costs408,00029,00074,00012,00079,000Total cost to make 13,600 engines$ 874,000*The equipment has a book value of $106,000 but its market value is zero.Requireda. Determine the maximum price per unit that Zachary would be willing to pay for the engines.b. Determine the maximum price per unit that Zachary would be willing to pay for the engines, if production increased to 17,900 units.(For all requirements, Round your answers to 2 decimal places.)a. Maximum price per unitb. Maximum price per unit

If Zackary Company buys the engines from the manufacturer, Cost of Material Cost of Labor…

Zachary 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. $ 272,000 408,000 29,000 Cost of materials (13,600 Units × $20) Labor (13,600 Units x $30) 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 74,000 12,000 79,000 Total cost to make 13,600 engines $ 874,000 *The equipment has a book value of $106,000 but its market value is zero. Required a. Determine the maximum price per unit that Zachary would be willing to pay for the engines. b. Determine the maximum price per unit that Zachary would be willing to pay for the engines, if production increased to 17,900 units. (For all requirements, Round your answers to 2 decimal places.) a. Maximum price per unit b. Maximum price per unit

Zachary 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. $ 272,000 408,000 29,000 Cost of materials (13,600 Units × $20) Labor (13,600 Units x $30) 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 74,000 12,000 79,000 Total cost to make 13,600 engines $ 874,000 *The equipment has a book value of $106,000 but its market value is zero. Required a. Determine the maximum price per unit that Zachary would be willing to pay for the engines. b. Determine the maximum price per unit that Zachary would be willing to pay for the engines, if production increased to 17,900 units. (For all requirements, Round your answers to 2 decimal places.) a. Maximum price per unit b. Maximum price per unit

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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