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What maximum unit purchase price

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Question - The McNamara Company has a maximum production capacity of 20,000 units per year. For that capacity level, fixed costs are $280,000 per year. Variable costs per unit are $30.

In the coming year, the company has orders for 24,000 units at $50. The company wants to make a minimum overall operating income of $148,000 on these 24,000 units.

Required - What maximum unit purchase price would McNamara Company be willing to pay to a subcontractor for the additional 4,000 units it cannot manufacture itself to earn an operating income of $148,000.

Reference no: EM132896546

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