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The Anderson Company has a maximum production capacity of 70,000 units per year. For that capacity level, fixed costs are $330,000 per year. Variable costs
The Anderson Company has a maximum production capacity of 70,000 units per year. For that capacity level, fixed costs are $330,000 per year. Variable costs per unit are $45. In the coming year, the company has orders for 75,000 units at $65. The company wants to make a minimum overall operating income of $185,000 on these 75,000 units. Requirement What maximum unit purchase price would Anderson Company be willing to pay to a subcontractor for the additional 5,000 units it cannot manufacture itself to earn an operating income of $185,000 ? Determine the maxiumum total cost to Anderson Company of producing the [75,000 units while earning an operating income of $185,000 Total costs to produce 75,000 units is $4,690,000. Identify the total cost to Anderson Company to manufacture 70,000 units. Total costs to manufacture 70,000 units
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