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Blouse Barn, an upscale, high - end boutique, located in Elmdale manufactures premium blouses. Currently, Blouse Barn manufacturers all of the blouses it sells. Blouse

Blouse Barn, an upscale, high-end boutique, located in Elmdale manufactures premium blouses. Currently, Blouse Barn manufacturers all of the blouses it sells. Blouse Barn's annual costs related to the production of 8,000 blouses are as follows:
Direct materials: $17,500
Direct labor: $10,000
Variable Overhead: $24,000
Fixed Overhead: $65,000
An outside supplier has offered to sell Blouse Barn identical blouses for $20 per blouse. If the blouses are purchased from the outside supplier, $25,000 of annual fixed overhead could be avoided and the new facilities now being used could be rented to another company for $12,500 per year.
What is the highest price that Blouse Barn could pay the outside supplier for the blouses and be indifferent between making or buying the blouses?
Question 1 options:
$20.00
$8.88
$11.13
$8.00
$14.56

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