The ABC Company manufactures components for use in producing one of its finished units. When 12,000 units are produced, the fully absorbed cost per unit is $35 as follows:
Direct Materials $ 5
Direct Labor 15
Variable Overhead 10
Fixed Overhead 5
The Williams Company has offered to sell 12,000 units to ABC for $37 each. If ABC accepts to offer, some of the facilities currently being used to manufacture the components can be rented as warehouse space for $75,000. $2 of the fixed overhead represents supervision which would be transferred to another area of the company and $3 of the fixed overhead per unit would have to be allocated to ABC's other products. Quantify and explain what ABC should do assuming all qualitative issues are satisfied?