Answered step by step
Verified Expert Solution
Question
1 Approved Answer
The Shoebottom Company has a maximum production capacity of 40,000 units per year. For that capacity level, fixed costs are $330,000 per year. Variable
The Shoebottom Company has a maximum production capacity of 40,000 units per year. For that capacity level, fixed costs are $330,000 per year. Variable costs per unit are $55. In the coming year, the company has orders for 45,000 units at $80. The company wants to make a minimum overall operating income of $190,000 on these 45,000 units. Requirement What maximum unit purchase price would Shoebottom Company be willing to pay to a subcontractor for the additional 5,000 units it cannot manufacture itself to earn an operating income of $190,000? Determine the maxiumum total cost to Shoebottom Company of producing the 45,000 units while earning an operating income of $190,000. Total costs to produce 45,000 units is $ 3,410,000 Identify the total cost to Shoebottom Company to manufacture 40,000 units. Total costs to manufacture 40,000 units $ 2,530,000 Determine the maxiumum additional costs to purchase 5,000 units from a subcontractor that Shoebottom Company would pay in order to earn an operating income of $190,000. The additional costs to purchase 5,000 units from a subcontractor is
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started