At what price would CJP be indifferent to XYZ’s offer?
The CJP Company produces 10,000 units of item S10 annually at a total cost of $190,000. Direct materials $ 20,000 Direct labor 55,000 Variable overhead 45,000 Fixed overhead 70,000 Total $190,000 The XYZ Company has offered to supply 10,000 units of S10 per year for $18 per unit. If CJP accepts the offer, $4 per unit of the fixed overhead would be saved. In addition, some of CJP’s facilities could be rented to a third party for $15,000 per year. At what price would CJP be indifferent to XYZ’s offer? (Points : 1) $17.00$17.50$18.50$19.50
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