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ompany manufactures 2,000 units of processor chip, A-983, each year for use on its production line. At this level of activity, the cost per
ompany manufactures 2,000 units of processor chip, A-983, each year for use on its production line. At this level of activity, the cost per unit of processor chip is: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Total manufaturing cost per unit. $ 354 20 8 80 $ 462 An outside supplier has offered to sell all units of processor chip the V. .....company requires. If the company decided to discontinue making processor chip, 25% of the above fixed manufacturing overhead costs could be avoided. The W company could use the facilities presently devoted to the production of processor chip to increase production of another product by 2.500 unite which would wield an additional contribution margin of $80,000 annually. Q: What is the maximum price the V company would be willing to pay the outside supplier for processor chip? A: $ per unit
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