WLS Company currently makes a key component for their tractors in house. The costs are as follows:
Direct Materials $ 4.00
Direct Labor 6.00
Allocated Overhead 10.00
Total Cost $20.00
If the component is purchased from an outside vendor the company will reduce their overhead costs by 80%. What is the maximum purchase price the company should consider to move to an outside vendor without respect to any other issue?
(present calculations for partial credit). Label your answer.