1)

a & b

2)

a & b

Finch 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. Cost of materials (13,100 Units X $15) Labor (13,100 Units * $25) Depreciation on manufacturing equipment Salary of supervisor of engine production Rental cost of equipment used to make engines Allocated portion of corporate-level facility-sustaining costs Total cost to make 13,100 engines $ 196,500 327,500 37,000 84,000 16,000 76,000 $ 737,000 *The equipment has a book value of $101,000 but its market value is zero. Required a. Determine the maximum price per unit thot Finch would be willing to pay for the engines. b. Determine the maximum price per unit that Finch would be willing to pay for the engines, if production increased to 18,000 units (For all requirements, Round your answers to 2 decimal places.) a. Maximum price per unit b. Maximum price per unit Unit-level materials Unit-level labor Unit-level overhead Product-level costs Allocated facility-level costs $ 6,500 6,000 3,300 11,400 26,800 *One-third of these costs can be avoided by purchasing the containers. Russo Container Company has offered to sell comparable containers to Benson for $2.60 each. Required a. Calculate the total relevant cost. Should Benson continue to make the containers? b. Benson could lease the space it currently uses in the manufacturing process. If leasing would produce $11,800 per month, calculate the total avoidable costs. Should Benson continue to make the containers? Answer is not complete Yes Total relevant cost Should Benson continue to make the containers? Total avoidable cont Should Benson continue to make the containers? b NO