Voltaic electronics uses a standard part in the manufacture of different types of radios. The total cost of producing 36,000 parts in $110,000, which includes fixed costs of $50,000 and variable costs of $60,000. The company can buy the part from an outside supplier for $1 per unit and avoid 30% of the fixed costs. Assume that the company can use the freed manufacturing space to make another product that can earn a profit of $16,000.if voltaic outsources, what will be the effect on operating income?

1. Increases of $55,000
2. Decrease of $55,000
3. Decrease of $15,000
4. Increase of $16,000
5. Increase of $39,000