Munoz 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.
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Munoz 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 (13,100 Units × $19) | $ | 248,900 | |
| Labor (13,100 Units × $12) | 157,200 | ||
| Depreciation on manufacturing equipment* | 25,000 | ||
| Salary of supervisor of engine production | 69,000 | ||
| Rental cost of equipment used to make engines | 27,000 | ||
| Allocated portion of corporate-level facility-sustaining costs | 82,000 | ||
| Total cost to make 13,100 engines | $ | 609,100 | |
*The equipment has a book value of $108,000 but its market value is zero.
Required
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Determine the maximum price per unit that Munoz would be willing to pay for the engines.
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Determine the maximum price per unit that Munoz would be willing to pay for the engines, if production increased to 18,650 units.
(For all requirements, Round your answers to 2 decimal places.)
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- Hicks Contracting collects and analyzes cost data in order to track the cost of installing decks on new home construction jobs. The following are some of the costs that they incur. Classify these costs as fixed or variable costs and as product or period costs. Lumber used to construct decks ($12.00 per square foot) Carpenter labor used to construct decks ($10 per hour) Construction supervisor salary ($45,000 per year) Depreciation on tools and equipment ($6,000 per year) Selling and administrative expenses ($35,000 per year) Rent on corporate office space ($34,000 per year) Nails, glue, and other materials required to construct deck (varies per job)Perez 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 (13,300 units × $13) $ 172,900 Labor (13,300 units × $14) 186,200 Depreciation on manufacturing equipment* 29,000 Salary of supervisor of engine production 69,000 Rental cost of equipment used to make engines 15,000 Allocated portion of corporate-level facility-sustaining costs 79,000 Total cost to make 13,300 engines $ 551,100 *The equipment has a book value of $109,000 but its market value is zero. Required Determine the maximum price per unit that Perez would be willing to pay for the engines. Determine the maximum price per unit that Perez would be willing to pay for the engines, if production increased to 19,000 units.Rundle 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 (15,000 Units x $13) Labor (15,000 Units x $25) Depreciation on manufacturing equipment* Salary of supervisor of engine production Rental cost of equipment used to make engines $ 195,000 375,000 40,000 74,000 19,000 80,000 783,000 The equipment has a book value of $107,000 but its market value is zero. Allocated portion of corporate-level facility-sustaining costs Total cost to make 15,000 engines Required a. Determine the maximum price per unit that Rundle would be willing to pay for the engines. b. Determine the maximum price per unit that Rundle would be willing to pay for the engines, if production increased to 18,000 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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