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Thermal Mugs, Inc., manufactures various types of leak-proof personal drink carriers. Thermals T6 container, its...

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Accounting

Thermal Mugs, Inc., manufactures various types of leak-proof personal drink carriers. Thermals T6 container, its most insulated carrier, maintains the temperature of the liquid inside for 6 hours. Thermal has designed a new lid for the T6 carrier that allows for easier drinking and pouring. The cost to produce the new lid is $2.19: Plato Plastics has approached Thermal and offered to produce the 120,000 lids Thermal will require for current production levels of the T6 carrier, at a unit price of $1.75 each. Should Thermal continue to make the lids or buy them from Plato?

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