7. Pilot Company manufactures a component used in the production of one of its main products. The following cost information is available: $420 100 Direct materials Direct labor (variable) Variable manufacturing overhead Fixed manufacturing overhead 90 30 A supplier has offered to sell the component to Carver for $650 per unit. If Pilot buys the component from the supplier, the released facilities can be used to manufacture a product that would generate a contribution margin of $10,000 annually. Assuming that Pilot needs 3000 components annually and that the fixed manufacturing overhead is unavoidable, what would be the impact on operating income if Pilot outsources? A) Operating income would decrease by $110,000 B) Operating income would increase by $10,000 C) Operating income would decrease by $10,000 D) Operating income would increase by $120,000 8. If variable costs increase by 5% without a corresponding increase in selling price, the number of units needed to breakeven will A) decrease B) remain the same C) increase D) cannot be determined which resulted in