Help

Gordon Company produces 1,000 units of a part per year which are used in the assembly of one of its products. The unit cost of producing these parts is: ausy 2coCo Variable manufacturing cost $15 Fixed manufacturing cost Total manufacturing cost $27 The part can be purchased from an outside supplier at $20 per unit. If the part is purchased from the outside supplier, two thirds of the total fixed costs incurred in producing the part can be eliminated. The annual increase or decrease on the company's operating incomes as a result of buying the part from the outside supplier would be: A. $3,000 increase $1,000 decrease $7,000 increase D. $5,000 decrease