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Question - Mable's Engine Company manufactures part Z92 used in several of its engine models. Monthly production costs for 1,000 units are as follows:
Direct Materials: $30,000
Direct Labour: $8000
Variable Overhead Costs: $21,000
Fixed Overhead Costs: $5000
Total Cost: $64,000
Mable's Engine Company has the option of purchasing the part from an outside supplier at $61 per unit. It is estimated that all of the fixed overhead costs assigned to Z92 will remain if the company purchases Z92 from an outside supplier.
Required - What the maximum price that Mables's Engine Company should be willing to pay the outside supplier?
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