Sandusky Inc $$\begin{array} { l r } \text { Variable costs } & \$ 600,000 \\\text { Fixed costs } & 900,000\end{array}$$

Multiple Choice

Sandusky Inc. has the following costs when producing 100,000 units: $$\begin{array} { l r } \text { Variable costs } & \$ 600,000 \\\text { Fixed costs } & 900,000\end{array}$$ An outside supplier is interested in producing the item for Sandusky. If the item is produced outside, Sandusky could use the released production facilities to make another item that would generate $150,000 of net income. At what unit price would Sandusky accept the outside supplier's offer if Sandusky wanted to increase net income by $120,000?

A) $8.70
B) $6.30
C) $7.50
D) $5.70