Corp currently makes a component but is thinking of outsourcing its production.

Its costs to make the component are as follows (based on an output of 100 units):

DM

400

DL

300

Var. O/H

100

Fixed OH

200

Total manuf, costs for 100 units

$1,000

Assume Corp can purchase (outsource) the components for $9 per unit. Assume that, if it outsources, $125 of FC are avoidable. In addition, assume that, by outsourcing, Corp can free up capacity that can be used to manufacture a different product and generate $300 of additional operating income.

Al what price per unit would the vendor need to sell the component to Corp such that Corp's operating income would not change regardiess of whether or not it outsourced the component?

Corp currently makes a component but is thinking of outsourcing its production. Its costs to make the component are as follows (based on an output of 100 units): $125 of FC are are purcnase (outsource) the components for $9 per unit. Assume that, if it outsources, $125 of FC are avoidable. In addition, assume that, by outsourcing, Corp can free up capacity that can be used to manufacture a different product and generate $300 of additional operating income. At what price per unit would the vendor need to sell the component to Corp such that Corp's operating income would nol change regardless of whether or not it outsourced the component