Aircraft Products, a manufacturer of aircraft landing gear, makes 1,900 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 $79 and fixed costs of $60. The valves could be purchased from an outside supplier at $86 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:

Multiple Choice

• Decrease by $55,100.

• Increase by $55,100.

• Decrease by $32,300.

• Increase by $32,300.