Upstate Mechanical, Inc. has been producing two bearings, components T79 and B81, for use in production. Data regarding these two components follow.

	T79	B81
Machine hours required per unit		2.00			3.00
Standard cost per unit:
Direct material	$	2.60		$	4.10
Direct labor		4.70			5.20
Manufacturing overhead
Variable*		2.35			2.60
Fixed		4.45			5.20
Total	$	14.10		$	17.10

^*Variable manufacturing overhead is applied on the basis of direct-labor hours.

Fixed manufacturing overhead is applied on the basis of machine hours.

Upstate Mechanicals annual requirement for these components is 8,700 units of T79 and 11,700 units of B81. Recently, management decided to devote additional machine time to other product lines, leaving only 36,300 machine hours per year for producing the bearings. An outside company has offered to sell Upstate Mechanical its annual supply of bearings at prices of $12.75 for T79 and $15.95 for B81. Management wants to schedule the otherwise idle 36,300 machine hours to produce bearings so that the firm can minimize costs (maximize net benefits).

Required:

1.	Compute the net benefit (loss) per machine hour that would result if Upstate Mechanical accepts the suppliers offer of $15.95 per unit for component B81.(Round your answer to 2 decimal places.Input the amount as positive value.Omit the "$" sign in your response.)

(Click to select)Net benefitNet loss

per machine hour if component B81 is purchased is

$

2.	Choose the correct answer. Upstate Mechanical will maximize its net benefits by:
	purchasing 11,700 units of B81 and manufacturing 8,700 units of T79. purchasing 8,700 units of T79 and manufacturing 11,700 units of B81. purchasing 5,400 units of B81 and manufacturing the remaining bearings. purchasing and manufacturing some amounts other than those given above. purchasing 5,400 units of T79 and manufacturing the remaining bearings.

35. Required information

3.

Suppose management has decided to drop product T79. Independently of parts (1) and (2), assume that the companys idle capacity of 36,300 machine hours has a traceable, avoidable annual fixed cost of $54,990, which will be incurred only if the capacity is used. Calculate the maximum price Upstate Mechanical should pay a supplier for component B81.(Round your answer to 2 decimal places. Omit the "$" sign in your response.)

Maximum price

$