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Question 1: Alieia Boat Company manufactures 10 luxury yachts per month. A navigation system is included in each yacht. Alieia Boat manufactures the navigation system in-house but is considering the possibility of outsourcing this function. At present, the variable cost per unit is $300, and the fixed costs are $38,000 per month. If it outsources the security system, fixed costs could be reduced by half, and the vacant facilities could be rented out to earn $3000 per month of rental income. What is the maximum contract cost that Alieia should pay for outsourcing?
Option A. any cost lower than $2500 per unit
Option B. any cost lower than $2200 per unit
Option C. any cost lower than $300 per unit
Option D. any cost lower than $3800 per unit
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