XYZ Corp. manufactures a variety of appliances which all use Part Generic. Currently, XYZ Corp manufactures Part Generic at their production facility. Assume XYZ Corp. can purchase 14,000 units of the part from the ALL Parts Company for $20.50 each. It has been producing 14,000 units of Part Generic annually. The per unit costs of producing Part Generic at the level of 14,000 units include:

Direct materials	$ 3.20 per unit
Direct labor	$ 8.20 per unit
Variable manufacturing overhead	$ 4.20 per unit
Fixed manufacturing overhead	$ 3.00 per unit
Total cost	$ 18.60 per unit

All of the fixed manufacturing overhead costs would continue whether Part Generic is made internally or purchased from an outside supplier, and the facilities currently used to make the part could be used to manufacture 14,000 units of another product that would have a $10 per unit contribution margin. If no additional fixed costs would be incurred, what should XYZ Corp. do?

Group of answer choices

Continue to make the part to earn an extra $7.00 per unit contribution to profit.

Make the new product and buy the part to earn an extra $5.10 per unit contribution to profit.

None of these.

Continue to make the part to earn an extra $8.20 per unit contribution to profit.

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