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Colden Enterprises manufactures one of the components used to assemble its main company product. Specialty Products, Inc., has offered to make the component at
Colden Enterprises manufactures one of the components used to assemble its main company product. Specialty Products, Inc., has offered to make the component at a cost of $12.20 per unit. Colden Enterprises' current cost is $14.75 per unit of the component, based on the 90,000 components that Colden Enterprises currently produces. Read the requirements This current cost per unit is based on the following calculations: (Click the icon to view the information) None of Colden Enterprises' fixed costs will be eliminated if the component is outsourced. However, the freed capacity could be used to build a new product. This new product would be expected to generate $27,000 of contribution margin per year. me cost to Day. Incremental Analysis Make Outsource Outsourcing Decision Component Component Difference Variable costs Plus: Fixed costs Total cost of 90,000 components Less: Profit from another product Net cost If Colden Enterprises outsources the manufacturing of the component, operating income will by Requirement 2. What is the maximum price per unit Colden Enterprises would be willing to pay if it outsources the component? Begin by identifying the basic formula that is used to determine the indifferent outsourcing cost per unit. Cost if making 90,000 components Cost if outsourcing 90,000 components Using the basic formula you determined above solve for the indifferent outsourcing cost per unit. (Round your answer to the nearest cent SX XX) The maximum price per unit Colden Enterprises would be willing to pay if it outsources the component is Choose from any list or enter any number in the input fields and then continue to the next question per unit
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