What is the annual costs of making the engines


Lunn 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 (14,100 Units × $18) $ 253,800 Labor366,600 Depreciation on manufacturing equipment* 26,000 Salary of supervisor of engine production 74,000 Rental cost of equipment used to make engines 22,000 Allocated portion of corporate-level facility-sustaining costs 76,000 _ Total cost to make 14,100 engines $ 818,400 *The equipment has a book value of $106,000 but its market value is zero. Questions: a. Determine the maximum price per unit that Lunn would be willing to pay for the engines. Maximum price per unit $ b. Determine the maximum price per unit that Lunn would be willing to pay for the engines, if production increased to 18,350 units? Maximum price per unit $?

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Accounting Basics: What is the annual costs of making the engines
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