The

Edwards

Company has a maximum production capacity of

65000

units per year. For that capacity level, fixed costs are

$ 310000

per year. Variable costs per unit are

$ 40

.

In the coming year, the company has orders for

69000

units at

$ 70

.

The company wants to make a minimum overall operating income of

$ 175000

on these

69000

units.

Requirement

What maximum unit purchase price would

Edwards

Company be willing to pay to a subcontractor for the additional

4000

units it cannot manufacture itself to earn an operating income of

$ 175000

?

Determine the maxiumum total cost to

Edwards

Company of producing the

69 000

units while earning an operating income of

$ 175 000

.

Total costs to produce 69,000 units is

.