Martin Company Currently Manufactures All Component Parts Used in the Manufacture

Martin Company currently manufactures all component parts used in the manufacture of various hand tools.The Extruding Division produces a steel handle used in three different tools.The budget for these handles is 120,000 units with the following unit cost. $$\begin{array} { | l | r | } \hline \text { Direct material } & \$ .60 \\\hline \text { Direct labor } & .40 \\\hline \text { Variable overhead } & .10 \\\hline \text { Fixed overhead } &\underline{ .20 }\\\hline \text { Total unit cost } & \$ 1.30 \\\hline\end{array}$$ Polishing Division purchases 20,000 handles from the Extruding Division and completes the hand tools.An outside supplier,Venture Steel,has offered to supply 20,000 units of the handle to Polishing Division for $1.25 per unit.The Extruding Division currently has idle capacity that cannot be used.What is the cost impact to Martin as a whole of purchasing from Venture Steel? (CMA adapted)

A) increase the handle unit cost by $0.05.
B) increase the handle unit cost by $0.15.
C) decrease the handle unit cost by $0.15.
D) decrease the handle unit cost by $0.25.