Fin Company fabricates inexpensive automobiles for sale to 3rd world countries. Each auto includes one wiring harness, which is currently made in-house. Details of the harness fabrication are as follows:

A factory in Indonesia has offered to supply Fin Company with ready-made units for a price of $15 each.

Assume that Fin's fixed costs are unavoidable, and that Fin will not be able to use the excess capacity in any profitable manner. What will be the impact on Fin's monthly operating income, if Fin decides to outsource?

A) It will go up by $3,000.

B) It will go down by $20,000.

C) It will go up by $20,000.

D) It will go down by $3,000.

Volume Variable cost per unit Fixed costs 1,200.00 $12.50 $20,000.00 units per month per unit per month