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Preston Industries, Inc. currently manufactures part QX100, which is used in several products produced by the company. Monthl

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Answer #1

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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