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Adams Company makes and sells lawn mowers for which it currently makes the engines. It...

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Accounting

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Adams 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 (14,300 Units * $23) Labor (14,300 Units X $14) Depreciation on manufacturing equipment* Salary of supervisor of engine production Rental cost of equipment used to make engines Allocated portion of corporate-level facility-sustaining costs Total cost to make 14,300 engines $ 328,900 200,200 40,000 79,000 24,000 72,000 $ 744,100 *The equipment has a book value of $101,000 but its market value is zero. Required a. Determine the maximum price per unit that Adams would be willing to pay for the engines. b. Determine the maximum price per unit that Adams would be willing to pay for the engines, if production increased to 18,500 units. (For all requirements, Round your answers to 2 decimal places.)

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