CM Manufacturing has provided the following unit costs pertaining to a component they manufacture

and use in the production of one of their main products:

Direct materials $($variable$)$ $$315$

Direct labor $($variable$)96$

Variable manufacturing overhead $72$

Fixed manufacturing overhead $29$

A supplier has offered to provide the component to CM manufacturing for $$500$ per unit. CM

Manufacturing currently has no plans to use idle space that would be created if accepting offer from

supplier. Assuming that CM Manufacturing needs $2,000$ components annually and the fixed

manufacturing overhead is unavoidable, what would be the impact on operating income if the company

outsources? $**$Show your work to support your answer.