Seven Seas Sailboats Company Manufactures 100 Luxury Yachts Per Month

Seven Seas Sailboats Company manufactures 100 luxury yachts per month.A compact media center is included in each yacht.Seven Seas Sailboats manufactures the media center in-house,but is considering the possibility of outsourcing this function.At present,the variable cost per unit is $275,and the fixed costs are $39,000 per month.If they outsource the media centers,fixed costs could be reduced by half,and the vacant facilities could be rented out to earn $1,000 per month of rental income.At what contract rate would outsourcing pay off for Seven Seas?

A) $480 per unit
B) $499 per unit
C) $388 per unit
D) $295 per unit