Q40. Lockrite Security Company manufacturers home alarms. Currently, it is manufacturing one of its components at a total cost of $45 which includes fixed costs of $15 per unit. An outside provider of this component has offered to sell Lockrite the component for $40. Should the company continue to make the component or use the outside provider?

Select one:

a.Continue to make the component. Cost savings from continuing to make the component is $5.

b.Continue to make the component. Cost savings from continuing to make the component is $30.

c.Use the outside provider. Cost savings from using outside provider is $10.

d.Continue to make the component. Cost savings from continuing to make the component is $10.

e.None of the above answers is correct.