Reginald is the controller for Scoot Inc. Scoot makes mobility scooters for senior citizens who have difficulty walking. Scoot has always manufactured the motors for its scooters in-house; however, the marketing manager of Moto Industries has offered to sell motors to Scoot for $420 each.

At the current level of demand of 4,500 units, the cost to produce one motor is as follows:Unit cost Direct materials $130 Direct labour 140 Manufacturing overhead (60% fixed)290 Total $ 560

Reginald has approached the company engineers with this proposal. They discussed the option of purchasing the motors from Moto and producing a new scooter called the Turbo X in the manufacturing space previously used to produce the motors. It is estimated that Scoot could sell 750 Turbo X scooters per year. The estimated costs to produce one unit of Turbo X are as follows:

Unit cost Direct materials $1,000Direct labour 780Variable manufacturing costs 120Additional fixed manufacturing costs320

At what selling price for the Turbo X will Scoot be indifferent between continuing to manufacture the motors in-house and outsourcing the motors and manufacturing the Turbo X?

a) $2,076 b) $2,104 c) $2,424 d) $3,120