DC Electronics uses a standard part in the manufacture of several of its radios. The total cost of producing 30,000 parts is $90,000, which includes fixed costs of $57,000 and variable costs of $33,000. The company can buy the part from an outside supplier for $2.50 per unit, and avoid 30% of the $57,000 offixed costs.

If DC Electronics decides to outsource the production of the part, how will it impact operating income?

Group of answer choices

A. Income increases $15,000

B. Income decreases $24,900 - Incremental Cost to Make = Avoidable FC $57,000 30% = $17,100 + $33,000 VC = $50,100 Cost to Buy $2.50 30,000 = $75,000 which is $24,900 higher OR full cost to buy = $75,000 price + $39,900 remaining fixed cost = $114,900 vs $90,000 current

C. Income decreases $132,000

D. Income increases $132,000