Use the Following Information to Answer the Questions Below

Multiple Choice

Use the following information to answer the questions below.
You currently make a part for old equipment at a cost of $20 / unit. The annual fixed cost for this equipment is $50,000. You have found an outside supplier who will make the part for $15 / unit if you will pay their annual fixed costs of $200,000 / year (see table) .

-Refer to the instruction above. What does the company save for the year by selecting the low-cost option (for annual requirements of 40,000 units) ?

A) $150,000
B) $300,000
C) $50,000
D) $40,000