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Adams Company makes and sells lawn mowers for which it currently makes the engines. It has an opportunity to purchase the engines from a reliable
Adams 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 (14,200 Units x $27) $ 383,400 Labor (14,200 Units x $14) 198,800 Depreciation on manufacturing equipment* 22,000 Salary of supervisor of engine production 74,000 Rental cost of equipment used to make engines 15,000 Allocated portion of corporatelevel facilitysustaining costs 86,000 Total cost to make 14,200 engines $ 779.2% *The equipment has a book value of $105,000 but its market value is zero. Required 3. Determine the maximum price per unit that Adams would be willing to pay for the engines. b. Determine the maximum price per unit that Adams would be willing to pay for the engines, if production increased to 18,300 units. (For all requirements, Round your answers to 2 decimal places.) 3. Maximum price per unit b. Maximum price per unit
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