Speed Quest inc. manufactures speed boats. Currently, the company manufactures its own engine for the boats at the following unit costs:

Direct materials $25.00

Direct Labor $40.00

Variable Overhead $15.00

Fixed Overhead $20.00

Another manufacturer has offered to supply speed quest with the engine at a cost of $85 each. Speed Quest currently makes 1,000 boats annually. If speed quest accepts the offer, what will be the short-term impact on net income?

a. decrease of $5,000

b. Increase of $15,000

c. Increase of $20,000

d. Decrease of $85,000