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Find what would be the maximum price per unit

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Reference no: EM132527505

Platon currently manufactures a subcomponent that is used in its main product. A supplier has offered to supply all the subcomponents needed at a price of $42. Platon currently produces 100,000 subcomponents at the following manufacturing costs:

Direct materials: $15.00

Direct labor: 9.00

Variable manufacturing overhead 10.00

Fixed manufacturing overhead 15.00

Unit cost 49.00

Question a. If Platon has no alternative uses for the manufacturing capacity, what would be the profit impact of buying the subcomponents from the supplier?

Question b. If Platon has no alternative uses for the manufacturing capacity, what would be the maximum price per unit they would be willing to pay the supplier?

Question c. Now assume Platon would avoid $150,000 in equipment leases and salaries if the subcomponent were purchased from the supplier. Now what would be the profit impact of buying from the supplier?

Reference no: EM132527505

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