The Rug Weaving Company manufactures an intermediate product identified as Y3. Variable manufacturing costs per unit of Y3 are as follows: Direct materials $2 Direct labor $7 Variable manufacturing overhead $5 Purple Company has offered to sell Rug Weaving 5,000 units of Y3 for $20 per unit. If Rug Weaving accepts the offer, $25,000 of fixed manufacturing overhead will be eliminated. Applying differential analysis to the situation, Rug Weaving should

Select one:

A. make Y3; the savings is $50,000.

B. buy Y3; the savings is $50,000.

C. make Y3; the savings is $5,000.

D. buy Y3; the savings is $5,000.