The CJP Company produces 10,000 units of item S10 annually at a total cost of $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?
A)$17.00.
B)$17.50.
C)$18.50.
D)$19.50.

Question

The CJP Company produces 10,000 units of item S10 annually at a total cost of $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?
A)$17.00. 
B)$17.50. 
C)$18.50. 
D)$19.50.

Quizplus · Accepted Answer

The Answer of The CJP Company produces 10,000 units of item S10 annually at a total cost of $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?
A)$17.00. 
B)$17.50. 
C)$18.50. 
D)$19.50.

The CJP Company Produces 10,000 Units of Item S10 Annually