Talboe Company makes wheels which it uses in the production of children's wagons. Talboe's costs...
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Accounting
Talboe Company makes wheels which it uses in the production of children's wagons. Talboe's costs to produce wheels annually are as follows:
Direct material $
Direct labor
Variable manufacturing overhead
Fixed manufacturing overhead
Total
$
An outside supplier has offered to sell Talboe similar wheels for $ per wheel. If the wheels are purchased from the outside supplier, $ of annual fixed manufacturing overhead would be avoided and the facilities now being used to make the wheels would be rented to another company for $ per year.
What is the highest price that Talboe could pay the outside supplier for each wheel and still be economically indifferent between making or buying the wheels? Round your answer to decimal places.
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