Sandusky Inc. has the following costs when producing 100,000 units:
Variable costs $600,000
Fixed costs 900,000
An outside supplier is interested in producing the item for Sandusky. If the item is produced outside, Sandusky could use the released production facilities to make another item that would generate $150,000 of net income. At what unit price would Sandusky accept the outside supplier's offer if Sandusky wanted to increase net income by $120,000?
a) $6.30
b) $8.70
c) $7.50
d) $5.70
a) $6.30
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