Blouse Barn, an upscale, highend boutique, located in Elmdale manufactures
premium blouses. Currently, Blouse Barn manufacturers all of the blouses it sells.
Blouse Barn's annual costs related to the production of blouses are as follows:
Direct materials: $
Direct labor: $
Variable Overhead: $
Fixed Overhead: $
An outside supplier has offered to sell Blouse Barn identical blouses for $ per
blouse. If the blouses are purchased from the outside supplier, $ of annual
fixed overhead could be avoided and the new facilities now being used could be
rented to another company for $ per year.
What is the highest price that Blouse Barn could pay the outside supplier for the
blouses and be indifferent between making or buying the blouses?
