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perk inc. manufactures lawn mowers. perk is considering whether to continue to make the motors...

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Accounting

perk inc. manufactures lawn mowers. perk is considering whether to continue to make the motors it uses or to buy from an outside supplier.
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To maintain its current level or operating income, what is the highest price Perk can pay the outside supplier for each motor?
Perk Inc. manufactures lawn mowers. Perk is considering whether to continue to make the motors it uses in its mowers or to buy motors from an outside supplier. Perk's per-unit cost of manufacturing motors in-house is as follows: Direct material Direct labor Variable manufacturing overhead Fixed manufacturing overhead Total per-unit product cost $95 $65 $23 $50 $233 With respect to the fixed manufacturing overhead, 30% is avoidable if Perk buys the motors from the outside supplier. In addition, making the motors uses 4 hours of machine time that is Perk's current constraint. If perk buys the motors, this time would be freed up for use on another product that requires 8 hours of machine time and that has a contribution margin of $90 per unit. To maintain its current level of operating income, what is the highest price Perk can pay the outside supplier for each motor? $273 $228 $198 $243 None of the above

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