OBJECTIVE 2 Exercise 13-15 Make-or-Buy Decision Zion Manufacturing had always made its components in-house. However, Bryce Component Works had recently offered to supply one component, K2, at a price of $25 each. Zion uses 10,000 units of component K2 each year. The cost per unit of this component is as follows: Direct materials Direct labour Variable overhead Fixed overhead Total $12.00 8.25 3.50 2.00 $25.75 Assume that 75 percent of Zion Manufacturing's fixed overhead for component K2 would be eliminated if that component were no longer produced. Required: CONCEPTUAL CONNECTION If Zion decides to purchase the component from Bryce, by how much will operating income increase or decrease? Which alternative is better