SHORT ANSWER. Write the word or phrase that best completes each statement or answers the question.

The Dimond Company is trying to decide whether it should purchase new equipment and continue to make its subassemblies internally or if production should be discontinued and the subassembly purchased from an outside supplier.

New equipment for producing the subassemblies can be purchased at a cost of $$500,000.$ The equipment would have a five$-$year useful life $($the company uses straight$-$line depreciation$)$ and a $$60,000$ salvage value.

Alternatively, the subassemblies could be purchased from an outside supplier. The supplier has offered to provide the subassemblies for $$12\mathrm{.}00$ each under a five$-$year contract.

Dimond Company's present costs per unit of producing the subassemblies internally $($with the old equipment$)$ are given below. The costs are based on a current activity level of $50,000$

subassemblies per year:

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