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As a result of increased sales, The Music Box needs 400,000 jewel-case liners rather than 250,000. The Music Box has enough existing capacity to make

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As a result of increased sales, The Music Box needs 400,000 jewel-case liners rather than 250,000. The Music Box has enough existing capacity to make all of the liners it needs. In addition, due to volume discounts, its variable costs of making each liner will decline to $0.29 per liner. Assume that by outsourcing, The Music Box can reduce its current fixed costs ($50,000) by $11,500. There is no alternative use for the factory space freed through outsourcing, so it will just remain idle. What is the maximum The Music Box will pay to outsource production of its CD liners? Begin by identifying the basic formula that is used to determine the indifferent outsourcing cost per unit. Cost if making liners Variable costs + Fixed costs Cost if outsourcing liners Variable costs + Fixed costs Using the basic formula you determined above solve for the indifferent outsourcing cost per unit. (Round the per unit calculation to three decimal places.) The maximum The Music Box will pay to outsource production of its CD liners is $ per unit

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