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solmaris [256]
3 years ago
6

Alieia Boat Company manufactures 10 luxury yachts per month. A navigation system is included in each yacht. Alieia Boat manufact

ures the navigation system in-house but is considering the possibility of outsourcing this function. At present, the variable cost per unit is $300, and the fixed costs are $38,000 per month. If it outsources the security system, fixed costs could be reduced by half, and the vacant facilities could be rented out to earn $3000 per month of rental income. What is the maximum contract cost that Alieia should pay for outsourcing?
a) any cost lower than $2500 per unit
b) any cost lower than $2200 per unit
c) any cost lower than $300 per unit
d) any cost lower than $3800 per unit
Business
1 answer:
Natasha2012 [34]3 years ago
7 0

Answer:

a) any cost lower than $2500 per unit

Explanation:

total avoidable costs = ($300 * 10) + ($38,000 / 2) + $3,000 = $25,000

total number of navigation systems prodcued per month = 10

avoidable cost per navigation system = $25,000 / 10 = $2,500

this means that th e comapny could pay up to $2,500 per navigtion system provided by an extrenal supplier

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