Donellan Company Produces a Special Gear Used in Automatic Transmissions

Multiple Choice

Donellan Company produces a special gear used in automatic transmissions.Each gear sells for $30,and the company sells approximately 500,000 gears each year.Unit cost data for the year follows: Donellan has received an offer from a foreign manufacturer to purchase 25,000 gears.Domestic sales would be unaffected by this transaction.If the offer is accepted,variable distribution costs will increase $1.00 per gear for insurance,shipping,and import duties.The relevant unit cost to a pricing decision on this offer is:

A) $18.00.
B) $20.00.
C) $24.00.
D) $26.00.