Calculate selling price per unit charged by outside supplier

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Reference no: EM13748736

XYZ Company makes 30,000 motors to be used in the production of its power lawn mowers. The cost per motor at this level of activity is as follows:

direct materials .............. $ 9.50

direct labor .................. 8.60

variable overhead ............. 3.75

allocated fixed overhead ...... 4.35

total ...................... $26.20

The motor has recently become available from an outside supplier for $25 per motor. If XYZ purchases the motor from the outside supplier, the space that is currently being used to manufacture the motor can be rented out for $154,500 per year.

Calculate the selling price per unit charged by the outside supplier that would make XYZ economically indifferent between making and buying the motor. Enter your answer with two places after the decimal Point

Reference no: EM13748736

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