Genent's Engine Company manufactures part TE456 used in several of its engine models. Monthly production costs for 1,000 units are as follows: Direct materials $46,000 Direct labor 11,500 Variable overhead costs 34,500 Fixed overhead costs 23,000 Total costs $115,000
Genent's Engine Company manufactures part TE456 used in several of its engine models. Monthly production costs for 1,000 units are as follows:
Direct materials $46,000
Direct labor 11,500
Variable overhead costs 34,500
Fixed overhead costs 23,000
Total costs $115,000
It is estimated that 8% of the fixed overhead costs assigned to TE456 will no longer be incurred if the company purchases TE456 from the outside supplier.
Genent's Engine Company has the option of purchasing the part from an outside supplier at $97.75 per unit.
The maximum price per unit (TE456 part) that Genent's Engine Company should be willing to pay the outside supplier is ________.
Select one:
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
