Author Question: Part Z45 is a part used in the production of blenders at Andrew Corporation. The following costs and ... (Read 56 times)

tth · **on:** Jan 4, 2020

Part Z45 is a part used in the production of blenders at Andrew Corporation. The following costs and data relate to the production of Part Z45:

Number of parts produced annually	20,000
Fixed costs	$40,000
Variable costs	$66,000
Total cost to produce	$106,000

Andrew Corporation can purchase the part from an outside supplier for $4.25 per unit. If they purchase from the outside supplier, 40% of the fixed costs would be avoided.

If Andrew Corporation buys the part, what is the most Andrew Corporation can spend per unit so that their operating income remains the same as it is currently?
◦ $1.50
◦ $4.10
◦ $1.65
◦ $5.70

amit · **Reply #1 on:** Jan 4, 2020

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