Thornton 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 (13,400 Units x $24) Labor (13,400 Units x $16) Depreciation on manufacturing equipment* Salary of supervisor of engine production Rental cost Allocated portion of corporate-level facility-sustaining costs $ 321,600 214,400 38,000 83,000 29,000 equipment used to make engines 90,000 $ 776,000 Total cost to make 13,400 engines *The equipment has a book value of $108,000 but its market value is zero. Required a. Determine the maximum price per unit that Thornton would be willing to pay for the engines. b. Determine the maximum price per unit that Thornton would be willing to pay for the engines, if production increased to 18,150 units? (For all requirements, round your intermediate calculations and final answers to 2 decimal places.) a. Maximum price per unit b. Maximum price per unit

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Thornton 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 (13,400 Units x $24)
Labor (13,400 Units x $16)
Depreciation on manufacturing equipment*
Salary of supervisor of engine production
Rental cost
Allocated portion of corporate-level facility-sustaining costs
$ 321,600
214,400
38,000
83,000
29,000
equipment used to make engines
90,000
$ 776,000
Total cost to make 13,400 engines
*The equipment has a book value of $108,000 but its market value is zero.
Required
a. Determine the maximum price per unit that Thornton would be willing to pay for the engines.
b. Determine the maximum price per unit that Thornton would be willing to pay for the engines, if production increased to 18,150 units?
(For all requirements, round your intermediate calculations and final answers to 2 decimal places.)
a. Maximum price per unit
b. Maximum price per unit
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Thornton 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 (13,400 Units x $24) Labor (13,400 Units x $16) Depreciation on manufacturing equipment* Salary of supervisor of engine production Rental cost Allocated portion of corporate-level facility-sustaining costs $ 321,600 214,400 38,000 83,000 29,000 equipment used to make engines 90,000 $ 776,000 Total cost to make 13,400 engines *The equipment has a book value of $108,000 but its market value is zero. Required a. Determine the maximum price per unit that Thornton would be willing to pay for the engines. b. Determine the maximum price per unit that Thornton would be willing to pay for the engines, if production increased to 18,150 units? (For all requirements, round your intermediate calculations and final answers to 2 decimal places.) a. Maximum price per unit b. Maximum price per unit

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