Refrigerator Company manufactures ice-makers for installation in refrigerators. The costs per unit, for 20,000 units of ice-makers, are as follows:

Cool Compartments Inc. has offered to sell 20,000 ice-makers to Refrigerator Company for \($28\) per unit. If Refrigerator accepts Cool Compartments' offer, the facilities used to manufacture ice-makers could be used to produce water filtration units. Revenues from the sale of water filtration units are estimated at \($80,000\), with variable costs amounting to 60% of sales. In addition, \($6\) per unit of the fixed overhead associated with the manufacture of ice-makers could be eliminated. For Refrigerator Company to determine the most appropriate action to take in this situation, the total relevant costs of make vs. buy, respectively, are

a. \($600,000\) vs. \($560,000.\)

b. \($648,000\) vs. \($528,000\).

c. \($600,000\) vs. \($528,000.\)

d. \($680,000\) vs. \($440,000.\)

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Direct materials. Direct labor.... Variable overhead Fixed overhead. Total costs $ 7 12 5 10 $34