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Florida Kitchens produces high-end cooking ranges. The costs to manufacture and market the ranges at the companys volume of 3,000 units per quarter are shown in the following table:

Unit manufacturing costs
Variable costs	$ 1,540
Fixed overhead	740
Total unit manufacturing costs		$ 2,280
Unit nonmanufacturing costs
Variable	460
Fixed	860
Total unit nonmanufacturing costs		1,320
Total unit costs		$ 3,600

The company has the capacity to produce 3,000 units per quarter and always operates at full capacity. The ranges sell for $4,250 per unit.

b. Assume the same facts as in requirement (a) but assume that the idle facilities would be used to produce 320 specialty ranges per quarter. These ranges could be sold for $19,000 each, while the costs of production would be $13,150 per unit variable manufacturing cost. Variable marketing costs would be $450 per unit. Fixed nonmanufacturing and manufacturing costs would be unchanged whether the original 3,000 regular ranges were manufactured or the mix of 1,800 regular ranges plus 320 specialty ranges was produced.

b-1. Considering this opportunity to use the freed-up space, what is the maximum purchase price per unit that Florida Kitchens should be willing to pay the Burns Electric to assemble regular ranges?

b-2. Should the Burns' proposal of $860 per unit be accepted?

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