McVay Industries (MI) produces ice cream supplies including bowls, scoops and shake makers, MI made $905,000 of pre-tax profit last year. They are looking for ways to improve profitability and are considering outsourcing production of their shake makers. Juan Hernandez, the controller, compiled the following information Units Manufactured and sold TOTAL Bowls Scoops Shake Makers 2,000,000 500,000 100,000 DM per unit $0.40 $1.25 $5.00 DL per unit $0.10 $0.50 $4,00 VMOH per unit $0.15 50.25 $5.00 Direct FMOH per unit (based on curre 50.10 50.25 $1.00 Common FMOH per unit (based on cu 50.00 50.25 $4.00 Total Cost per unit $1.05 $2.50 $19.00 Selling Price $2.00 $4.00 $25.00 Gross Profit per Unit $0.95 $1.50 $6.00 Total Sales $4,000,000 $2,000,000 $2,500,000 $500,000 Total COGS $2,100,000 $1,250,000 $1,900,000 $5,250,000 Total Gross Profit $1,900,000 $750,000 $600,000 $3,250,000 Total Variable (selling) costs (200000) (100000) (125000) (425000) SG&A Foxed Costs-Direct (400000) (200000) (100000) (700000) SG&A Fixed Costs-Common (680000) (300000) (240000) (1220000) Pre-Tax Profit $620,000 $150,000 $135,000 $905,000 4 if the shake maker is outsourced, the company would have idle capacity (that means no additional fixed costs are needed) and could produce and sell an additional 150,000 bowls (for the same selling price of 52 per bow) Question 1: What is the maximum amount MI should pay for the shake maker from an independent supplier (price per unit) to be no worse off financially? Show your work Question 2: if McVay Industries stops making all scoops and all shake makers, and makes and sells 3,000,000 bowls, what is the new Total Pre-Tax Profit?