Question
A proposal is received from an outside contractor who will make and ship 2,000 stoves per month directly to Davis's customers as orders are received
A proposal is received from an outside contractor who will make and ship 2,000 stoves per month directly to Davis's customers as orders are received from Davis's sales force. Davis's fixed marketing costs would be unaffected, but its variable marketing costs would be cut by 30 percent for these 2,000 units produced by the contractor. Davis's plant would operate at two-thirds of its normal level, and total fixed manufacturing costs would be cut by 40 percent. What in-house unit cost should be used to compare with the quotation received from the supplier? Assume the payment to the outside contractor is $205.(Round your answer to 2 decimal places.)
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