Lunn company makes and sells lawn mowers for which it

Reference no: EM13569975

Lunn Company makes and sells lawn mowers for which it currently makes the engines. It has an opportunity to purchase the engines from a reliable manufacturer. The annual costs of making the engines are shown here. Cost of materials (14,100 Units × $18) $ 253,800 Labor366,600 Depreciation on manufacturing equipment* 26,000 Salary of supervisor of engine production 74,000 Rental cost of equipment used to make engines 22,000 Allocated portion of corporate-level facility-sustaining costs 76,000 _ Total cost to make 14,100 engines $ 818,400 *The equipment has a book value of $106,000 but its market value is zero. Questions: a. Determine the maximum price per unit that Lunn would be willing to pay for the engines. Maximum price per unit $ b. Determine the maximum price per unit that Lunn would be willing to pay for the engines, if production increased to 18,350 units? Maximum price per unit $?

Reference no: EM13569975

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