Ping Company manufactures 100 limos per month. An option is included in each limo. Ping...
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Ping Company manufactures 100 limos per month. An option is included in each limo. Ping manufactures the option but is considering the possibility of outsourcing this function. At present, the variable cost per unit is $280, and the fixed costs are $40,000 per month. If it outsources the option, fixed costs could be reduced by half, and the vacant facilities could be rented out to earn $4,000 per month of rental income. At what contract cost would outsourcing pay off for Ping?
Select one: a. $480 per unit b. None of the above c. $520 per unit d. $280 per unit e. $400 per unit
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