Florida Snorkel Company makes snorkeling equipment. Assume that Hawaii Snorkel Company has offered to produce snorkeling masks for Florida Snorkel Company for $18 per mask. Florida Snorkel Company needs 120,000 masks per period. Florida Snorkel Company can only avoid $150,000 of fixed costs if it outsources; the remaining fixed costs are unavoidable. Florida Snorkel Company currently has the following costs at a production level of 120,000 masks:

Manufacturing Costs	Total Cost	Cost per Mask
Direct Materials	$900,000	$7.50
Direct Labor	96,000	0.80
Variable MOH	624,000	5.20
Fixed MOH	780,000	6.50
Total	$2,400,000	$20.00

Florida Snorkel Company should:

Select one:

a. Not outsource production because operating loss would increase by $390,000

b. Outsource production because operating income would increase by $390,000

c. Not outsource production because operating income would decline by $390,000

d. Outsource production because operating loss would decline by $390,000