A$20$ box is $\backslash (\backslash$$ $0\mathrm{.}82\backslash ).$ By outsourcing the manufacture of these A$20$ boxes, Hamill can reduce its current fixed costs by $\backslash (\backslash$$ $100,800\backslash ).$ There is no alternative use for the factory space freed up through outsourcing, so it will just remain idle.

What is the maximum Hamill will pay per Model A$20$ box to outsource production of this box?

Begin by identifying the basic formula that is used to determine the indifferent outsourcing cost per unit.

Using the basic formula you determined above solve for the indifferent outsourcing cost per unit.

The maximum Hamill will pay to outsource production of its A$20$ boxes is

Hamill would be indifferent between outsourcing and making the A$20$ boxes if the outsourcing price was

per A$20$ box. Therefore, Hamill will only be willing to pay per A$20$ box if outsourcing.