If cost minimization is the major consideration and the

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Ruth Company produces 1,000 units of a necessary component with the following costs:

  • Direct Materials..................................$24,000
  • Direct Labor........................................16,000
  • Variable Overhead..................................4,000
  • Fixed Overhead......................................7,000

 

Ruth Company could avoid $3,000 in fixed overhead costs if it acquires the components externally. If cost minimization is the major consideration and the company would prefer to buy the components, what is the maximum external price that Ruth Company would accept to acquire the 1,000 units externally?

Reference no: EM13598370

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