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Monthly production costs for 125,000 units are as follows: Direct materials $ 535,000 Direct labor $ 287,500 Variable overhead costs $ 365,000 Fixed overhead costs

Monthly production costs for 125,000 units are as follows: Direct materials $ 535,000 Direct labor $ 287,500 Variable overhead costs $ 365,000 Fixed overhead costs $ 156,250 Total Costs $ 1,343,750 It is estimated that 30% of the fixed overhead costs assigned to PTQR-MFID will no longer be incurred if the company purchases PTQR-MFID from an outside supplier. The company has the option of purchasing the part from an outside supplier at $9.25 per unit. 4. If the Company accepts the offer from the outside supplier, calculate the monthly avoidable costs. If the company purchases 125,000 PTQR-MFID parts from the outside supplier per month, calculate the increase/(decrease) in monthly operating income. Be sure to state if the amount will be an increase or decrease. Calculate the maximum per-unit price that the company should be willing to pay an outside supplier for a PTQR-MFID (round to two decimal places). Within the relevant range, a cost which changes on a per unit basis is __________________________.

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