The Camel Company Produces 10,000 Units of Item Roto 454

Multiple Choice

The Camel Company produces 10,000 units of item Roto 454 annually at a total cost of $190,000.
$$\begin{array} { l r } \text { Direct materials } & \$ 20,000 \\\text { Direct labor } & 55,000 \\\text { Variable overhead } & 45,000 \\\text { Fixed overhead } & \underline{ 70,000} \\ \text { Total } &\underline{ \$ 190,000}\\\end{array}$$
The Yukon Company has offered to supply 10,000 units of Roto 454 per year for $18 per unit. If Camel accepts the offer, $4 per unit of the fixed overhead would be saved. In addition, some of Camel's facilities could be rented to a third party for $15,000 per year.
-At what price would Camel be indifferent to Yukon's offer?

A) $17.00.
B) $17.50.
C) $18.50.
D) $19.50.