Kavlico Inc. incurs the following costs to produce 10,000 units of a subcomponent: Direct materials $14,000 Direct labor $18,750 Variable overhead $21,000 Fixed overhead $27,000 An outside supplier has offered to sell Kavlico the subcomponent for $4.75 a unit. ul Il Il Il 11 11 11 Il Il Il Il 11 U II II Il 11 Il Il If Kavlico could avoid $5,000 of fixed overhead by accepting the offer, net income would increase (decrease) by 0 $1,250. O $(9,750). O $(5,250). O $11,250