Homework Answers
Total cost should not exceed $179,000 even if Preston is willing to pay to outside supplier.
Unavoidable fixed overhead cost = $44,000 X 80% = $35,200
Maximum cost to incur to purchase from outside supplier = $179,000 - $35,200 = $143,800
Number of units to be purchased = 10,000
Purchase price per unit = $143,800 / 10,000 = $14.38
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