Blue Ridge Bicycles uses a standard part in the manufacture of several of its bikes. The cost of producing

41 comma 00041,000

parts is

$ 138 comma 000$138,000,

which includes fixed costs of

$ 73 comma 000$73,000

and variable costs of

$ 65 comma 000$65,000.

The company can buy the part from an outside supplier for

$ 3.90$3.90

per unit, and avoid 30% of the fixed costs.Assume that factory space freed up by purchasing the part from an outside source can be used to manufacture another product that can be sold for

$ 13 comma 000$13,000

profit. If Blue Ridge Bicycles makes the part, what will its operating income be?

A.

$ 60 comma 000$60,000

less than if the company bought the part

B.

$ 60 comma 000$60,000

greater than if the company bought the part

C.

$ 198 comma 000$198,000

greater than if the company bought the part

D.

$ 86 comma 000$86,000

greater than if the company bought the part