Chafford, Inc. currently manufactures 2,000 subcomponents in one of its factories. The unit costs to produce the subcomponents are:

	Per unit
Direct materials		$	60
Direct labor			100
Variable manufacturing overhead			75
Fixed manufacturing overhead			90
Total unit cost		$	325

Due to a labor strike, Chafford is considering purchasing the subcomponents from an outside supplier for $250 per unit. The union is demanding a 20% increase in pay for direct labor. Fixed overhead is not avoidable. How much could Chafford increase their pay before it would be more advantageous to purchase the subcomponents from the outside supplier?

5%

15%

50%

75%