3.

Part P40 is a part used in the production of air conditioners at Jackson Corporation. The following costs and data relate to the production of Part P40:

Number of parts produced annually: 22,000

Fixed costs: $40,000

Variable costs: $66,000

Total cost to product: $106,000

Jackson Corporation can purchase the part from an outside supplier for $4.25 per unit. If they purchase from the outside supplier, 50% of the fixed costs would be avoided. If Jackson Corporation buys the part, what is the most Jackson Corporation can spend per unit so that the operating income is equal to $97,000?

A) $1.93

B) $1.00

C) $5.23

D) $3.50