Sheridan Company incurs the following costs to produce 10300 units of a subcomponent:

Direct materials$8652Direct labor11639Variable overhead12978Fixed overhead16200

An outside supplier has offered to sell Sheridan the subcomponent for $2.85 a unit.

If Sheridan could avoid $3000 of fixed overhead by accepting the offer, net income would increase (decrease) by

$(3692).

$914.

$6914.

$(5987).