Problem: Module $6$ Textbook Problem $5$

Learning Objective: $6-3$ Make appropriate outsourcing decisions

Baird 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.

$*$The equipment has a book value of $$110,000$ but its market value is zero.

Required

a$.$ Determine the maximum price per unit that Baird would be willing to pay for the engines.

b$.$ Determine the maximum price per unit that Baird would be willing to pay for the engines, if production increased to $17,900$ units.

$($For all requirements, Round your answers to $2$ decimal places.$)$

a$.$ Maximum price per unit

b$.$ Maximum price per unit