Aircraft Products, a manufacturer of aircraft landing gear, makes 1,400 units each year of a special valve used in assembling one of its products. The unit cost of producing this valve includes variable costs of $74 and fixed costs of $65. The valves could be purchased from an outside supplier at $81 each. If the valve were purchased from the outside supplier, 40% of the total fixed costs incurred in producing this valve could be eliminated. Buying the valves from the outside supplier instead of making them would cause the company's operating income to:

• Decrease by $26,600.
• Increase by $44,800.
• Increase by $26,600.
• Decrease by $44,800.