Helmer Containers manufactures a variety of boxes used for packaging. Sales of its Model A20 box have increased significantly to a total of 440,000 A20 boxes. Helmer has enough existing production capacity to make all of the boxes it needs. The variable cost of making each A20 box is $0.71. By outsourcing the manufacture of these A20 boxes, Helmer can reduce its current fixed costs by $92,400. There is no alternative use for the factory space freed up through outsourcing, so it will just remain idle. What is the maximum Helmer will pay per Model A20 box to outsource production of this box? Begin by identifying the basic formula that is used to determine the indifferent outsourcing cost per unit. Cost if making A20 boxes = Direct materials + Direct labor Direct materials + Direct labor + Variable costs Sales revenue - Fixed costs Sales revenue - Total costs Sales revenue - Variable costs Variable costs + Fixed costs Cost if outsourcing A20 boxes rent outsourcing cost per unit. boxes is A20 boxes if the outsourcing price was per A20 box if outsourcing. Begin by identifying the basic formula that is used to determine the indifferent outsourcing cost per unit. Cost if making A20 boxes Cost if outsourcing A20 boxes Using the basic formula you determined above solve for the indifferent outsourcing cost per unit. The maximum Helmer will pay to outsource production of its A20 boxes is Helmer would be indifferent between outsourcing and making the A20 boxes if the outsourcing price was per A20 box. Therefore, Helmer will only be willing to pay per A20 box if outsourcing.