How would I perform a differential analysis for the question below?

Make-or-Buy Decision.Coffee Mugs, Inc., currently manufactures ceramic coffee mugs. Management is interested in outsourcing production to a reputable manufacturing company that can supply the cups for $2 per unit. Coffee Mugs produces 100,000 mugs each year. Variable production costs are $0.80 and annual fixed costs are $150,000. If production is outsourced, all variable costs and 40 percent of annual fixed costs will be eliminated.

Would alternative 1 (producing internally) or alternative 2 (outsourcing) be the best alternative?