The Bogart Company Produces 5,000 Units of Item SLM 46

Multiple Choice

The Bogart Company produces 5,000 units of item SLM 46 annually at a total cost of $200,000.
$$\begin{array} { l r } \text { Direct materials } & \$ 20,000 \\\text { Direct labor } & 55,000 \\\text { Variable overhead } & 45,000 \\\text { Fixed overhead } &\underline{ 80,000 }\\\text { Total } & \underline{ \$ 200,000} \\\end{array}$$
The Conner Company has offered to supply all 5,000 units of SLM 46 per year for $35 per unit. If Bogart accepts the offer, $8 per unit of the fixed overhead would be saved. In addition, some of Bogart's leased facilities could be vacated, reducing lease payments by $30,000 per year.
-At what price would Bogart be indifferent to Conner's offer?

A) $40.
B) $38.
C) $35.
D) $24.