Question
Same facts as in problem 4, but now if Hospital Hoist outsources the production of 10,000 hoists/month, the idle capacity could be used to produce
Same facts as in problem 4, but now if Hospital Hoist outsources the production of 10,000 hoists/month, the idle capacity could be used to produce 7500 modified hoists/month that could be sold for $910 each. Variable manufacturing costs would be $550/unit and variable marketing costs would be $100/unit for the modified hoists. Total fixed costs would be same as when 30,000 regular hoists are produced. What is the maximum per unit price that Hospital Hoist would be willing to pay the outside contractor in order for Hospital Hoist to be indifferent between outsourcing production at that price (and making/selling the modified hoists) and the status quo?
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