L Ltd can subcontract out one of its components at $18 each. The business can produce the component internally for a variable cost of $14 per unit. In addition fixed costs have been allocated to components at $5 per component. L Ltd has spare capacity. Should it make the component internally or contract it out?

a) subcontract as the total cost of subcontracting at $18 is cheaper than the cost of $19 for internal production

b) make the component as the variable cost of $14 for internal production is cheaper than the $18 cost of subcontracting

c) subcontract as it will be easier