1. Vehicle Company manufactures 100 EVs per month. A navigation system is included in each EV. Vehicle produces the navigation system in-house but is considering the possibility of outsourcing the production. Currently, the company provides the following information: the variable cost per unit is $280, and the fixed costs are $38,000 per month. If it outsources the navigation system, fixed costs could be reduced by 50%, and the idle facilities could be rented out to earn $3000 per month of rental income. What is the maximum contract cost that Vehicle should pay for outsourcing?

Select one:

A.

any cost lower than$380 per unit

B.

any cost lower than $280 per unit

C.

any cost lower than $470 per unit

D.

any cost lower than $500 per unit