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Holtrop Company makes 25,000 units per year of a part it uses in the products it manufactures. The unit product cost of this part is
Holtrop Company makes 25,000 units per year of a part it uses in the products it manufactures. The unit product cost of this part is computed as follows Direct Materials $ 21.00 Direct Labor $ 1150 Variable Manufacturing Overhead $400 Fixed Manufacturing Overhead $ 7.00 Variable Selling $ 3.00 Fixed Selling $ 1.50 Total $ 48.00 An outside supplier has offered to sell the company all of these parts it needs. If the company accepts this offer, the facilities now being used to make the part would be ide and fixed manufacturing overhead would be reduced by 35% of current cost. The variable selling costs would be reduced to 55% of current cost Required What is the maximum amount the company should be willing to pay an outside supplier per unit for the part if the supplier commits to supplying all 10,000 units required each year
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