question 21

Question 21 (3 points) Hawkeye Company fabricates specialized arrows. Each arrow includes a sensor, which is currently made in-house. Details of the sensor fabrication are as follows: Volume 900 units per month Variable cost per unit Fixed costs $14,000 per month Another factory has offered to supply Hawkeye with ready-made units for a cost of $15 per sensor. Assume that Hawkeye's fixed costs could be reduced by $4,000 if it outsources and that Hawkeye will not be able to use the excess capacity in any profitable manner. If Hawkeye decides to outsource, monthly operating income will decrease by $14,000 increase by $7,200 decrease by $2,300 increase by $14,000