Robinson Company is evaluating the make or buy decision in regard to making the wheels for its skateboards internally. The currently manufactured wheels have a variable unit cost of $3. Fixed costs are $20,000 per month, however, 25% can be eliminated if wheels are no longer produced. A supplier has offered to produce this part for $4 per wheel and can produce the 4,000 wheels for the 1000 skateboards needed monthly. Should Robinson outsource wheels or make them internally?

Group of answer choices Outsource because the incremental cost savings is $4,000.

Outsource because the incremental cost savings is $1000.

Outsource because the incremental cost savings is $3,200.

Make the product because the incremental cost savings is $4,000.