5 (2/20) Part P40 is a part used in the production of air...
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Accounting
5 (2/20)
Part P40 is a part used in the production of air conditioners at Jackson Corporation. The following costs and data relate to the production of Part P40:
| Number of parts produced annually | 22,000 |
| Fixed costs | $40,000 |
| Variable costs | $66,000 |
| Total cost to produce | $106,000 |
Jackson Corporation can purchase the part from an outside supplier for $4.25 per unit. If they purchase from the outside supplier, 50% of the fixed costs would be avoided. If Jackson Corporation buys the part, what is the most Jackson Corporation can spend per unit so that operating income is equal to $97,000?
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