Question
43. (6 points) Otter Inc. manufactures part OT100, which is used in several products produced by Otter Inc. Monthly production costs for 10,000 units
43. (6 points) Otter Inc. manufactures part OT100, which is used in several products produced by Otter Inc. Monthly production costs for 10,000 units of OT100 are as follows: Direct materials Direct labor Variable overhead costs Fixed overhead costs Total manufacturing costs $ 82,000 $13,000 $ 40,000 $ 44,000 $ 179,000 Otter Inc. has the option of purchasing the part from an outside supplier. Of the fixed overhead costs allocated to the OT100 product, 20% could be eliminated if the company chose to purchase the part from an outside supplier. a. Based solely on a short-run financial analysis only, calculate the maximum per unit price that Otter would be willing to pay the outside vendor for part OT100.
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