determine the maximum amount per unit the company should pay an overseas supplier

QUESTION 2 XYZ Ltd. has been evaluating whether it will continue to manufacture product A in house or outsource it. The unit cost of producing product A is as follows: 10 5 15 Direct materials Direct labour Variable manufacturing overhead Fixed manufacturing overhead Total 50 80 The lease payment for machinery (i.e. fixed cost), which is needed to produce product A internally, is 5,000 per annum and cannot be canceled. The company produces and sells 4,200 units of product A per year. After an overseas supplier submitted a bid of 32 per the same product, some management members felt that they could reduce costs by outsourcing the production of product A. If product A is purchased from the supplier its unused factory space could be leased to another company for 1,000 per year. REQUIRED: QUESTION 2 XYZ Ltd. has been evaluating whether it will continue to manufacture product A in house or outsource it. The unit cost of producing product A is as follows: 10 5 15 Direct materials Direct labour Variable manufacturing overhead Fixed manufacturing overhead Total 50 80 The lease payment for machinery (i.e. fixed cost), which is needed to produce product A internally, is 5,000 per annum and cannot be canceled. The company produces and sells 4,200 units of product A per year. After an overseas supplier submitted a bid of 32 per the same product, some management members felt that they could reduce costs by outsourcing the production of product A. If product A is purchased from the supplier its unused factory space could be leased to another company for 1,000 per year. REQUIRED