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Climate - Control, Inc., manufactures a variety of heating and air - conditioning units. The company is currently manufacturing all of its own component parts.

Climate-Control, Inc., manufactures a variety of heating and air-conditioning units. The company is currently manufacturing all of its own component parts. An outside supplier has offered to sell a thermostat to Climate-Control. To evaluate this offer, Climate-Control, Inc., has gathered the following information relating to its own cost of producing the thermostat internally:
\table[[,Per Unit,Total],[Direct materials,$6,$90,000,],[Direct lab,8,120,000,],[Variable manufacturing overhead,1,15,000,],[Fixed manufacturing overhead, traceable*,2,30,000,],[\table[[Fixed manufacturing overhead, common, but],[allocated]],10?,150,000?,],[Total,$27,$405,000,]]
"Supervisor salaries that could be avoided
Assume the company has no alternative use for the facilities now being used to produce the thermostat. What is the maximum price at which Climate-Control would be indifferent between buying and making the thermostat?
$14
$15
$22
$17
$20
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