The CJP Company produces 10,800 units of item S10 annually at a total cost of $214,000.
Direct materials 24,000
Direct labor 63,000
Variable overhead 49,000
Fixed overhead 78,000
Total 214,000
The XYZ Company has offered to supply 10,800 units of S10 per year for $22.00 per unit. If CJP accepts the offer, $8.00 of the fixed overhead would be saved. In addition, some of CJP's facilities could be rented to a third party for $19,000 per year. At what price would CJP be indifferent to XYZ's offer?
a. 23.28
b. 22.35
c. 17.59
d. 24.28