Albacore Co. (AC) uses 5,000 molded parts in their production of finished goods. AC can buy the parts pre-molded from a vendor with a strong reputation for quality and reliability or they can make them for the following costs per unit:
|Variable Manufacturing Overhead||\$45|
|Fixed Manufacturing Overhead||\$30|
|Total cost per unit||\$125|
Of the fixed manufacturing overhead, 30% cannot be avoided if they buy the pre-molded materials.
What is the maximum price per pre-molded unit that AC can pay without hurting profits?