BikePro Company is evaluating the use of a supplier versus making the pedals for its

bicycles internally. The currently manufactured pedals have a variable unit cost of $3. Fixed

costs are $5,000 per month, however, 5% can be eliminated if the pedals are no longer

produced. A supplier has offered to produce this part for $5 per pedal and can produce the

400 pedals for the 200 bicycles needed monthly. Should BikePro outsource pedals or make

them internally?