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 100,000 masks per period. Florida Snorkel Company can only avoid $125,000 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 100,000 pairs of masks:

Manufacturing Costs	Total Cost	Cost per Mask
Direct materials	$750,000	$7.50
Direct labor	80,000	0.80
Variable MOH	520,000	5.20
Fixed MOH	650,000	6.50
Total	$2,000,000	$20.00

Florida Snorkel Company should:

Select one:

A. Not outsource production because operating income would decline by $325,000

B. Outsource production because operating loss would decline by $325,000

C. Not outsource production because operating loss would increase by 325,000

D. Outsource production because operating income would increase by $325,000