Ignore your answers to the previous questions.

Assume that Vandelay has an unmet demand for 6,500 Newman style houses.

Given the 1,000,000 DLH capacity, Arthur Vandelay, production manager, located a nearby factory space that they could rent and use to assemble remaining items. The rent is $7,000,000. In addition, Vandelay Industries has a strictly worded contract with their shipping partner, J-Peterman Trucking, that Peterman will only pick up tiny homes from the primary factory. Thus, Vandelay needs to ship the items made at the rented factory back to the primary factory.

At what average shipping cost per tiny house would Vandelay Industries be indifferent between going forward with this rented space and not fulfilling the remaining orders?

PER UNIT Direct Materials Direct Labor ($20/hr) Variable OH ($10/mhr) Fixed OH Total Prod Cost per Unit The Lloyd Braun 600 650 1,000 800 3,050 The Newman 750 1,000 1,150 1,000 3,900 Sales Price per Unit $4,000 $5,000