Cotton Corp

Multiple Choice

Cotton Corp. currently makes 10,000 subcomponents a year in one of its factories. The unit costs to produce are: An outside supplier has offered to provide Cotton Corp with the 10,000 subcomponents at a $84.50 per unit price. Fixed overhead is not avoidable. What is the maximum price Cotton Corp should pay the outside supplier?

A) $65.00
B) $84.50
C) $91.00
D) $58.50