E$3$ Q$20$ through outsourcing, so it will just remain idle.

What is the maximum Hoffman will pay per Model A$20$ box to outsource production of this box?

Begin by identifying the basic formula that is used to determine the indifferent outsourcing cost per unit.

Using the basic formula you determined above solve for the indifferent outsourcing cost per unit.

The maximum Hoffman will pay to outsource production of its A$20$ boxes is

Hoffman would be indifferent between outsourcing and making the A$20$ boxes if the outsourcing price was

per A$20$ box. Therefore, Hoffman will only be willing to pay

$]$ per A$20$ box if outsourcing.