Scott Corporation produces a part that is used in the production of one of its products. The per-unit costs associated with the annual production of 12,500 units of this part are as follows:

Direct materials	$3.75
Direct labor	7.50
Variable factory overhead	5.00
Fixed factory overhead	20.00
Total costs	$36.25

Smith Company has offered to sell 12,500 units of the same part to Scott Corporation for $20.00 per unit. Scott should:

Select one:

a. Buy the part, thereby saving $16.25 per unit.

b. Buy the part, thereby saving $250,000 annually.

c. Make the part, thereby saving $8.75 per unit.

d. Buy the part, thereby saving $3.75 per unit.

e. Make the part, thereby saving $3.75 per unit.