Chafford Inc. currently manufactures 2000 subcomponents in one of its factories. The unit costs to produce the subcomponents are Direct materials 64 Direct labor 100 Variable manufacturing overhead 77...

Chafford Inc. currently manufactures 2000 subcomponents in one of its factories. The unit costs to produce the subcomponents are
Direct materials  64
Direct labor 100
Variable manufacturing overhead 77
Fixed manufacturing overhead 92
Total units cost  $333

Due to a labor strike, chafford is considering purchasing the subcomponets from an outside supplier for 250 per unit. The union is demanding 20% increase in pay for direct labor. Fixed overhead is not avoidable.

How much could chafford increase their pay beofre it would be more advantageous to purchase the subcomponents from the outside supplier?


5%  9%  50% or 45% ?