5 1 points Print Problem: Module 6 Textbook Problem 5 Learning Objective: 6-3 Make appropriate outsourcing decisions 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 (13,900 Units × $29) Labor (13,900 Units x $29) 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 13,900 engines $ 403, 100 403, 100 a. Maximum price per unit b. Maximum price per unit 27,000 78,000 12,000 72,000 $995, 200 *The equipment has a book value of $98,000 but its market value is zero. 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 18,150 units. (For all requirements, Round your answers to 2 decimal places.)

5 1 points Print Problem: Module 6 Textbook Problem 5 Learning Objective: 6-3 Make appropriate outsourcing decisions 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 (13,900 Units × $29) Labor (13,900 Units x $29) 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 13,900 engines $ 403, 100 403, 100 a. Maximum price per unit b. Maximum price per unit 27,000 78,000 12,000 72,000 $995, 200 *The equipment has a book value of $98,000 but its market value is zero. 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 18,150 units. (For all requirements, Round your answers to 2 decimal places.)

Entrepreneurial Finance

6th Edition

ISBN:9781337635653

Author:Leach

Publisher:Leach

Chapter1: Introduction To Finance For Entrepreneurs

Section: Chapter Questions

Problem 7SEP

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