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Company X reported the following monthly unit costs to manufacture and market a ...

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Company X reported the following monthly unit costs to manufacture and market a particular product.

  • Direct materials $ 1,78
  • Variable manufacturing labor $ 4,45
  • Variable manufacturing overhead $ 4,87
  • Fixed manufacturing overhead $ 2.00
  • Variable selling costs $ 5,83
  • Fixed selling costs$ 2.32

The company has the opportunity to buy the same product from an external supplier, at the same quality level. Fixed selling costs would be unaffected, but variable selling costs would be reduced by 30% upon acceptance of the proposal.

What is the maximum amount per unit that the company can pay the supplier, considering that they are not willing to decrease current operating income?

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