Minden Company manufactures part QE767 used in several of its engine models. Monthly production costs for 10,000 units are as follows:

Direct materials

$80,000

Direct labor

20,000

Variable support costs

50,000

Fixed support costs

40,000

Total costs

$190,000

It is estimated that 20% of the fixed support costs assigned to part QE767 will no longer be incurred if the company purchases the part from the outside supplier. Minden Company has the option of purchasing the part from an outside supplier at $16 per unit.

If Minden Company purchases 10,000 QE767 parts from the outside supplier per month, then its monthlyoperating incomewill:

a) decrease by $16,000.

b) increase by $30,000.

c) decrease by $2,000.

d) decrease by $58,000.