After Much Consideration, Trina Has Decided Sever Ties with Her

Essay

After much consideration, Trina has decided sever ties with her current plastic bottle supplier due to consistent shipping delays and yearly price increases. She has put inquiries in with a different external vendor who has agreed to a pricing structure as follows: first 12,000 bottles at $0.82 per bottle, next 10,000 bottles at $0.80 per bottle, next 12,000 bottles at $0.77 per bottle, and any remaining bottles at $0.72 per bottle. They will also ask for a 10% surcharge to cover shipping and handling. The internal Materials department has also provided a quote to Trina for the bottles needed. The Materials department has reported the following external sales data for this year: Sales (of 203,450 bottles) at $181,070.50, Variable Costs of $140,380.50, and Fixed Costs of $22,640.50. The Materials department has an operating capacity of 250,000 bottles and has agreed to supply the bottles at the minimum acceptable transfer price. Trina's department needs 78,903 bottles in order to fulfill all of their upcoming orders. What is the average cost per unit under both the price quote from the external vendor and from the internal department? (Do not round intermediate calculations.)