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(Solved) Establishing a price for an outsourcing decision Romero Corporation makes and sells skateboards.


Establishing a price for an outsourcing decision Romero Corporation makes and sells skateboards. Romero currently makes the 60,000 wheels used annually in its skateboards but has an opportunity to purchase the wheels from a reliable manufacturer. The costs of making the wheels follow. Materials (60,000 units 3 $5) $300,000 Labor (60,000 units 3 $3) 180,000 Depreciation on manufacturing equipment* 24,000 Salary of wheel production supervisor 65,000 Rental cost of equipment used to make wheels 55,000 Allocated portion of corporate-level facility-sustaining costs 33,000 Total cost to make 60,000 wheels $657,000 Required Determine the maximum price per unit that Romero would be willing to pay for the wheels. Would the price computed in Requirement a change if production were increased to 80,000 units? Support your answer with appropriate computations.

 


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Oct 15, 2019

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