Seven Seas Company Manufactures 100 Luxury Yachts Per Month

Seven Seas Company manufactures 100 luxury yachts per month. Included in each yacht is a compact media center. Seven Seas manufactures media center in-house, but is considering the possibility of outsourcing that function, in order to close down some of their facilities and reduce the administrative costs. At present, the variable cost per unit is $275 and the fixed costs are $39,000 per month. Assuming that if they outsource, and the fixed costs could be eliminated entirely, at what contract rate would outsourcing pay off for Seven Seas? Round to nearest whole dollar.

A) at any rate lower than $844 per unit
B) at any rate lower than $796 per unit
C) at any rate lower than $775 per unit
D) at any rate lower than $665 per unit