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Sunland Music produces 59700 blank CDs on which to record music. The CDs have the following costs:
Direct Materials $11600
Direct Labour 15000
Variable Overhead 3200
Fixed Overhead 7200
Question 1: None of Sunland's fixed overhead costs can be reduced, but another product could be made that would increase profit contribution by $4200 if the CDs were acquired externally. If cost minimization is the major consideration and the company would prefer to buy the CDs, what is the maximum external price that Sunland would be willing to accept to acquire the 59700 units externally?
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