Alieia Boat Company Manufactures 10 Luxury Yachts Per Month

question 21

Multiple Choice

Alieia Boat Company manufactures 10 luxury yachts per month.A navigation system is included in each yacht.Alieia Boat manufactures the navigation system in-house but is considering the possibility of outsourcing this function.At present,the variable cost per unit is $300,and the fixed costs are $38,000 per month.If it outsources the security system,fixed costs could be reduced by half,and the vacant facilities could be rented out to earn $3000 per month of rental income.What is the maximum contract cost that Alieia should pay for outsourcing?

• A) any cost lower than $2500 per unit
• B) any cost lower than $2200 per unit
• C) any cost lower than $300 per unit
• D) any cost lower than $3800 per unit

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