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W.T. Ginsburg Engine Company manufactures part ACT31107 used in several of its engine models. Monthly production costs for 1,060 units are as follows: Direct materials
W.T. Ginsburg Engine Company manufactures part ACT31107 used in several of its engine models. Monthly production costs for 1,060 units are as follows: Direct materials Direct labor Variable overhead costs Fixed overhead costs Total costs $44,000 10,500 31,500 20,000 $105,000 It is estimated that 9% of the fixed overhead costs assigned to ACT31107 will no longer be incurred if the company purchases ACT31107 from the outside supplier. W.T. Ginsburg Engine Company has the option of purchasing the part from an outside supplier at $92.75 per unit The maximum price that W.T. Ginsburg Engine Company should be willing to pay the outside supplier is O A $101.70 per ACT31107 part O B. $81.00 per ACT31107 part OC. $100.00 per ACT31107 part OD. $82.83 per ACT31107 part
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