Cotton Corp. currently makes 10,900 subcomponents a year in one of its factories. The unit costs to produce are:

	Per unit
Direct materials		$	27.00
Direct labor			21.00
Variable manufacturing overhead			15.00
Fixed manufacturing overhead			8.00
Total unit cost		$	71.00

An outside supplier has offered to provide Cotton Corp. with the 10,900 subcomponents at an $82.00 per unit price. Fixed overhead is not avoidable. If Cotton Corp. accepts the outside offer, what will be the effect on short-term profits?

• $87,200 increase

• no change

• $68,670 increase

• $207,100 decrease