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What maximum external price that monroe company would be

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Reference no: EM132510169

The Monroe Company produces 1,000 units of a necessary component with the following costs:

Direct Materials $34,000

Direct Labor 15,000

Variable Overhead 8,000

Fixed Overhead 10,000

  • None of Monroe fixed overhead costs can be reduced, but another product could be made that would increase profit contribution by $12,000 if the components were acquired externally.

Question 1: If cost minimization is the major consideration and the company would prefer to buy the components, what is the maximum external price that Monroe Company would be willing to accept to acquire the 1,000 units externally?

Reference no: EM132510169

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