star company currently produces product x that sells for $10,00 per unit, has a variable cost of $6.00/unit, and has a manufacturing overhead cost of $1.00/unit of which $0.40 is fixed. Total unit sales of product x are 20000 units

the external supplier proposes to supply star company with 20,000 units of product X. if star company stops producing product X, it can move the product X manager, who has an annual salary of $60,000 to a vacancy in another department. otherwise, that vacancy would have to be filled by hiring an outside manager whose annual salary would be $50,000. The accountant further advises that this is the only fixed cost that be avoided if production of product X is ended.

In addition, if the production of product X were contracted out, star company would be able to produce an additional 8,000 units of product Y, which has a selling price of $7.00/unit, a variable cost of $5.00/unit and no fixed costs. The maximum (ceiling) price per unit that star company should be willing to pay to the outside supplier to supply product X is:

1) $9.90

2) $8.30

3) $10.40

4) none of the choices provided.