Olive Corp. currently makes 20,000 subcomponents a year in one of its factories. The unit costs to produce are: An outside supplier has offered to provide Olive Corp with the 20,000 subcomponents at a $36 per unit price. Fixed overhead is not avoidable. What is the maximum price Olive Corp should pay the outside supplier?
A) $32
B) $36
C) $40
D) $44

Question

Olive Corp. currently makes 20,000 subcomponents a year in one of its factories. The unit costs to produce are:  An outside supplier has offered to provide Olive Corp with the 20,000 subcomponents at a $36 per unit price. Fixed overhead is not avoidable. What is the maximum price Olive Corp should pay the outside supplier?
A) $32 
B) $36 
C) $40 
D) $44

Quizplus · Accepted Answer

The Answer of Olive Corp. currently makes 20,000 subcomponents a year in one of its factories. The unit costs to produce are:  An outside supplier has offered to provide Olive Corp with the 20,000 subcomponents at a $36 per unit price. Fixed overhead is not avoidable. What is the maximum price Olive Corp should pay the outside supplier?
A) $32 
B) $36 
C) $40 
D) $44