20. Olive Corp. currently makes 13,900 subcomponents a year in one of its factories. The unit costs to produce are:

	Per unit
Direct materials		$	28
Direct labor			24
Variable manufacturing overhead			24
Fixed manufacturing overhead			10
Total unit cost		$	86

An outside supplier has offered to provide Olive Corp. with the 13,900 subcomponents at a $95 per unit price. Fixed overhead is not avoidable. If Olive Corp. rejects the outside offer, what will be the effect on short-term profits?

Multiple Choice

• no change

• $139,000 decrease

• $264,100 increase

• $264,100 decrease