Problem: Module $6$ Textbook Problem $5$

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

Gibson 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.

Cost of materials $(14,000$ Units $\backslash$times $$24)$ $ $336,000$

Labor $(14,000$ Units $\backslash$times $$17)238,000$

Depreciation on manufacturing equipment$*37,000$

Salary of supervisor of engine production $75,000$

Rental cost of equipment used to make engines $22,000$

Allocated portion of corporate$-$level facility$-$sustaining costs $82,000$

Total cost to make $14,000$ engines $ $790,000$

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

Required

Determine the maximum price per unit that Gibson would be willing to pay for the engines.

Determine the maximum price per unit that Gibson would be willing to pay for the engines, if production increased to $18,500$ units.

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