The Balearic Company manufactures and sells several products, one of which is called a slip differential....

 

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The Balearic Company manufactures and sells several products, one of which is called a slip differential. The company normally sells 16,000 units of the slip differential each month. At this activity level, unit costs are: Direct Materials Direct Labor Variable Manufacturing Overhead Fixed Manufacturing Overhead Variable Selling Expenses Fixed Selling Expenses $16.50 $28.00 $5.50 $11.00 $4.50 $ 3.00 The company is considering outsourcing production of the slip differential. In the event that it does so, the company will save 80% of the fixed manufacturing overhead and 40% of the variable selling expenses, but fixed selling expenses will remain unchanged. In addition, there is factory space that will be available to be sublet, generating revenues of $52,000 each month. What is the maximum price that Helion Company should pay per slip differential if it chooses to outsource production? The Balearic Company manufactures and sells several products, one of which is called a slip differential. The company normally sells 16,000 units of the slip differential each month. At this activity level, unit costs are: Direct Materials Direct Labor Variable Manufacturing Overhead Fixed Manufacturing Overhead Variable Selling Expenses Fixed Selling Expenses $16.50 $28.00 $5.50 $11.00 $4.50 $ 3.00 The company is considering outsourcing production of the slip differential. In the event that it does so, the company will save 80% of the fixed manufacturing overhead and 40% of the variable selling expenses, but fixed selling expenses will remain unchanged. In addition, there is factory space that will be available to be sublet, generating revenues of $52,000 each month. What is the maximum price that Helion Company should pay per slip differential if it chooses to outsource production?

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