EV Cars uses a standard part in the manufacture of several of its cars. The cost of producing 15,000 parts is $36,000, which includes fixed costs of $13,2000 and variable costs of $22,800. The company can buy the part from an outside supplier for $2.00 per unit and avoid 30% of fixed costs.

If Davis EV Cars makes the part, its operating income will be:

$6,000 less than if the company bought the part

$2,600 greater than if the company bought the part

$3,960 less than if the company bought the part

$3,240 greater than if the company bought the part