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Finch Company makes and sells lawn mowers for which it currently makes the engines. It...

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Accounting

Finch 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 (14,600 Units $28) $ 408,800
Labor (14,600 Units $27) 394,200
Depreciation on manufacturing equipment* 30,000
Salary of supervisor of engine production 69,000
Rental cost of equipment used to make engines 10,000
Allocated portion of corporate-level facility-sustaining costs 89,000
Total cost to make 14,600 engines $ 1,001,000

*The equipment has a book value of $94,000 but its market value is zero. Required

  1. Determine the maximum price per unit that Finch would be willing to pay for the engines.

  2. Determine the maximum price per unit that Finch would be willing to pay for the engines, if production increased to 18,350 units.

(For all requirements, Round your answers to 2 decimal places.)

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