Part P40 is a part used in the production of air conditioners at Jackson Corporation. The following costs and data relate to the production of Part P40:

Number of parts produced annually	23,000
Fixed costs	$40,000
Variable costs	$66,000
Total cost to produce	$106,000

Jackson Corporation can purchase the part from an outside supplier for

$4.25

per unit. If they purchase from the outside supplier, 50% of the fixed costs would be avoided. If Jackson Corporation makes the part, how much will its operating income be?

A.

$20,000

greater than if the company bought the part

B.

$11,750

greater than if the company bought the part

C.

$51,750

greater than if the company bought the part

D.

$117,750

greater than if the company bought the part