Transcribed Image Text: Zachary 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

Transcribed Image Text: Zachary 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.
$ 272,000
Cost of materials (13,600 Units x $20)
Labor (13,600 Units x $30)
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
408,000
29,000
74,000
12,000
79,000
Total cost to make 13,600 engines
$ 874,000
*The equipment has a book value of $106,000 but its market value is zero.
Required
a. Determine the maximum price per unit that Zachary would be willing to pay for the engines.
b. Determine the maximum price per unit that Zachary would be willing to pay for the engines, if production increased to 17,900 units.
(For all requirements, Round your answers to 2 decimal places.)
a. Maximum price per unit
b. Maximum price per unit

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