Relevant Costing

P is considering whether to continue making a component or to buy it from an outside supplier. It uses 12,000 of the components each year. The internal manufacturing cost comprises: $/unit Direct materials 3.00 Direct labour 4.00 Variable overhead 1.00 Specific fixed cost 2.50 Other fixed costs 2.00 ––––– 12.50 ––––– If the direct labour were not used to manufacture the component, it would be used to increase the production of another item for which there is unlimited demand. This other item has a contribution of $10.00 per unit but requires $8.00 of labour per unit. What is the maximum price per component, at which buying is preferable to internal manufacture? What is the maximum price per component, at which buying is preferable to internal manufacture? The answer here is 15.50. -What I don't understand is why is the maximum price for buying is higher than what the internal cost of making it. This answer did not make sense to me. Is it correct?