Maximum external price, Majestic could avoid $5,000 in

Maximum external price

Reference no: EM13148636

Majestic Music produces 60,000 CDs on which to record music. The CDs have the following costs:

Direct Materials $15,000
Direct Labor 20,000
Variable Overhead 4,000
Fixed Overhead 9,000

Majestic could avoid $5,000 in fixed overhead costs if it acquires the CDs externally. If cost minimization is the major consideration and the company would prefer to buy the 60,000 units externally, what is the maximum external price that Majestic would expect to pay for the units?

Reference no: EM13148636

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