14.

On A Boat Company manufactures 100 luxury yachts per month. Included in each yacht is a bluetooth sound system. On A Boat Company manufactures the bluetooth sound system. The company is considering the possibility of outsourcing the production of the sound systems in order to close down some of its facilities and reduce the administrative costs. At present, the variable cost per unit is $300, and fixed costs are $60,000 per month. Assume that if it outsources, fixed costs could be reduced by 40%. The production manager advised the company to contract with a foreign supplier who offered a contract cost of $450 per unit. If it outsources the sound systems, how would that affect operating income?

Question 14 options:

	Operating income would remain the same.
	Operating income would decrease by $14,000.
	Operating income would increase by $9,000.
	Operating income would increase by $14,000.