XYZ Company manufactures a part for its production cycle. The annual costs per unit for 5,000 units of the part are as follows:

Per Unit

Direct materials $3.00

Direct labor 5.00

Variable factory overhead 4.00

Fixed factory overhead 2.00

Total costs $14.00

The fixed factory overhead costs are unavoidable. Another company has offered to sell 5,000 units of the same part to XYZ Company for $15 per unit. The facilities currently used to make the part could be rented out to another manufacturer for $20,000 a year. XYZ Company should ________.

Select one:

a. buy the part and rent facilities

b. make the part to save $5,000

c. None of the above

d. make the part to save $15,000