ClimateControl, Inc., manufactures a variety of heating and airconditioning units. The company is currently manufacturing all of its own component parts. An outside supplier has offered to sell a thermostat to ClimateControl. To evaluate this offer, ClimateControl, Inc., has gathered the following information relating to its own cost of producing the thermostat internally:
tablePer Unit,TotalDirect materials,$$Direct labVariable manufacturing overhead,Fixed manufacturing overhead, traceabletableFixed manufacturing overhead, common, butallocatedTotal$$
"Supervisor salaries that could be avoided
Assume the company has no alternative use for the facilities now being used to produce the thermostat. What is the maximum price at which ClimateControl would be indifferent between buying and making the thermostat?
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