Sierra Semiconductors produces 100,000 high-tech computer chips per month. Each chip uses a component that Sierra makes in- house. The variable costs to make the component are $1.40 per unit, and the fixed costs are $1,100,000 per month. The company has been approached by a foreign producer who can supply the component, w n acceptable quality standards, for S 120 each. If the company chooses to outsource fixed costs can be reduced by 50%. There are no other uses for the facilities currently employed in making the component. What would be the effect on operating income, if the company decides to outsource? e O A. There would be no effect on operating income. hti OB. Operating income would decrease by $20,000. hes C. Operating income would increase by $120,000. Operating income would increase by $570.000. in ig w che