ABC Company needs 1,000 components for one of its products. It can subcontract production of the components to the XYZ Company for $40 each. The business can produce the components internally for a total variable cost of $30 per component. ABC Company has spare capacity. What will be the impact on ABC's profit if they choose to subcontract production of the component to XYZ Company?

Select one:

a.

$10,000 decrease

b.

$10,000 increase

c.

$1,000 decrease

d.

$1,000 increase