Rimes Company makes and sells lawn mowers for which it currently makes the engin

Question

Rimes Company makes and sells lawn mowers for which it currently makes the engines. It has an opportunity to purchase the engines from a reliable manufacturer. The annual costs of making the engines are shown here. *The equipment has a book value of $91,000 but its market value is zero. Required a. Determine the maximum price per unit that Rimes would be willing to pay for the engines. b. Determine the maximum price per unit that Rimes would be willing to pay for the engines, if production increased to 18,600 units?

Explanation / Answer

Avoidable cost for lawn mowers

2)

Cost of material $192,400 Labour $236,800 Salary of supervisor $69,000 Rental cost of equipment $20,000 Total cost to make 14,800 engines $518,200 cost per unit = $518,200/14800 units $35.01 Maximum price $35.01

Related Questions

Navigate

• Browse (All)
• Browse R
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.