Levesque 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 (20,000 Units × $26)$520,000 Labor (20,000 Units × $20) 400,000 Depreciation on manufacturing equipment* 42,000 Salary of supervisor of engine production 85,000 Rental cost of equipment used to make engines 23,000 Allocated portion of corporate-level facility-sustaining costs 80,000 Total cost to make 20,000 engines$1,150,000 *The equipment has a book value of $90,000 but its market value is zero.RequiredDetermine the maximum price per unit that Levesque would be willing to pay for the engines.Determine the maximum price per unit that Levesque would be willing to pay for the engines, if production increased to 24,000 units. Exercise 13-11A (Static) Establishing price for an outsourcing decision LO 13-3Levesque 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.Cost of materials (20,000 Units × $26)Labor (20,000 Units × $20)Depreciation on manufacturing equipment*Salary of supervisor of engine productionRental cost of equipment used to make enginesAllocated portion of corporate-level facility-sustaining costsTotal cost to make 20,000 engines*The equipment has a book value of $90,000 but its market value is zero.Required$a. Maximum price per unitb.Maximum price per unit520,000400,00042,00085,00023,00080,000$1,150,000a. Determine the maximum price per unit that Levesque would be willing to pay for the engines.b. Determine the maximum price per unit that Levesque would be willing to pay for the engines, if production increased to 24,000units.(For all requirements, Round your answers to 2 decimal places.)

The amount of money that is spent by a company to produce one unit of the product that they sell is…

Levesque 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 (20,000 Units × $26) $ 520,000 Labor (20,000 Units × $20) 400,000 Depreciation on manufacturing equipment* 42,000 Salary of supervisor of engine production 85,000 Rental cost of equipment used to make engines 23,000 Allocated portion of corporate-level facility-sustaining costs 80,000 Total cost to make 20,000 engines $ 1,150,000 *The equipment has a book value of $90,000 but its market value is zero. Required Determine the maximum price per unit that Levesque would be willing to pay for the engines. Determine the maximum price per unit that Levesque would be willing to pay for the engines, if production increased to 24,000 units.

Levesque 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 (20,000 Units × $26) $ 520,000 Labor (20,000 Units × $20) 400,000 Depreciation on manufacturing equipment* 42,000 Salary of supervisor of engine production 85,000 Rental cost of equipment used to make engines 23,000 Allocated portion of corporate-level facility-sustaining costs 80,000 Total cost to make 20,000 engines $ 1,150,000 *The equipment has a book value of $90,000 but its market value is zero. Required Determine the maximum price per unit that Levesque would be willing to pay for the engines. Determine the maximum price per unit that Levesque would be willing to pay for the engines, if production increased to 24,000 units.

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter8: Tactical Decision-making And Relevant Analysis

Section: Chapter Questions

Problem 45E

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Cost of materials (20,000 Units × $26)	$	520,000
Labor (20,000 Units × $20)		400,000
Depreciation on manufacturing equipment*		42,000
Salary of supervisor of engine production		85,000
Rental cost of equipment used to make engines		23,000
Allocated portion of corporate-level facility-sustaining costs		80,000
Total cost to make 20,000 engines	$	1,150,000