What price would cjp be indifferent to offer

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Reference no: EM13863628

The CJP Company produces 10,800 units of item S10 annually at a total cost of $214,000.

Direct materials 24,000

Direct labor 63,000

Variable overhead 49,000

Fixed overhead 78,000

Total 214,000

The XYZ Company has offered to supply 10,800 units of S10 per year for $22.00 per unit. If CJP accepts the offer, $8.00 of the fixed overhead would be saved. In addition, some of CJP's facilities could be rented to a third party for $19,000 per year. At what price would CJP be indifferent to XYZ's offer?

a. 23.28

b. 22.35

c. 17.59

d. 24.28

Reference no: EM13863628

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