Winona Johnson is the president of Johnson Mfg., which manufactures coats. She is trying to decide whether to make 3,000 Type III coats or purchase them from a subcontractor to fill a special order that she just received. There are no marketing costs on the special order. Acceptance of the special order would not necessitate any premium pay for overtime work or additional fixed costs. The management accountant for Johnson Mfg. has supplied the following data:  

Required:
1. At what purchase price per unit would Ms. Johnson be indifferent as to whether her firm manufactured the coats or they were purchased from a subcontractor?
2. What qualitative factors might influence Ms. Johnson's decision regarding manufacturing the coats or purchasing them?

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Cost Data for Type III Coats: Sale Price $42 Direct Materials 15 Direct Labor 9 Fixed Mfg. Overhead Variable Mfg. Overhead Variable Marketing Costs Fixed Marketing Costs 3 6 3 1 Fixed Administrative Overhead Cost Data for Type III Coats: Sale Price $42 Direct Materials 15 Direct Labor 9 Fixed Mfg. Overhead Variable Mfg. Overhead Variable Marketing Costs Fixed Marketing Costs 3 6 3 1 Fixed Administrative Overhead