The talbot company makes wheels that it uses in the production of bicycles. talbot's costs to produce 100,000 wheels annually are:

direct $30,000
direct $50,000
variable $20,000
fixed $70,000

an outside supplier has offered to sell talbot similar wheels for $1.25 per wheel. if the wheels are purchased from the outside supplier, $15,000 of annual fixed overhead could be avoided and the facilities now being used could be rented to another company for $45,000 per year.

1)what is the highest price that talbot could pay the outside supplier for the wheel and still be economically indifferent between making or buying the wheels?

a) $1.70
b) $1.60
c) $1.55
d) $1.15