Find the maximum price

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Reference no: EM132792007

Question - ?Konrade'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 ?$40,000

Direct labour ?10,000

Variable overhead costs ?30,000

Fixed overhead costs ?20,000

Total costs ?$100,000

It is estimated that? 10% of the fixed overhead costs assigned to TE456 will no longer be incurred if the company purchases TE456 from the outside supplier.? Konrade's Engine Company has the option of purchasing the part from an outside supplier at? $85 per unit.

Find the maximum price that? Konrade's Engine Company should be willing to pay the outside supplier?

A. ?$50 per TE456 part.

B. ?$80 per TE456 part.

C. ?$98 per TE456 part.

D. ?$100 per TE456 part.

E. ?$82 per TE456 part.

Reference no: EM132792007

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