Olive Corporation currently makes 12,900 subcomponents a year in one of its factories. The unit costs to produce are:

	Cost per Unit
Direct materials	$ 20
Direct labor	27
Variable manufacturing overhead	14
Fixed manufacturing overhead	11
Total unit cost	$ 72

An outside supplier has offered to provide Olive with the 12,900 subcomponents at a $76 per-unit price. No portion of fixed overhead is avoidable. If Olive rejects the outside offer, what will be the effect on short-term profits?

Multiple Choice

$193,500 increase

no change

$141,900 decrease

$193,500 decrease