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.
$$\begin{array} { | l | r | } \hline \text { Direct materials } & \$ 20,000 \\\hline \text { Direct labor } & 55,000 \\\hline \text { Variable overhead } & 45,000 \\\hline \text { Fixed overhead } & 70,000 \\\hline \text { Total } & \$ 190,000 \\\hline\end{array}$$
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.