Part R-3 is used in one of Pries Corporation's products. The company makes 10,000 units of this part each year with a unit variable cost of $50 and a unit fixed cost of $20. An outside supplier has offered to provide the annual requirement of the part R-3 for only $60 each. The company estimates that 30% of the fixed costs above will continue if the parts are purchased from the outside supplier.

When deciding whether to make or buy the component, what cost of making the part R-3 should be compared to the price of buying the component?

Select one:

a. $600,000

b. $560,000

c. $640,000

d. $500,000