Tapeo Company has always made its electronic components that go into their GPS systems in-house. Streeter Company has offered to supply these electronic components at a price of $38 each. Tapeo uses 18,000 units of these components each year. The cost per unit of this component is as follows:

Direct materials	$13.75
Direct labor	$16.00
Variable overhead	$7.00
Fixed overhead	$8.25
Total	$45.00

Assume that 45% of Tapeo Company's fixed overhead would be eliminated if the electronic component was no longer produced in-house.

Required:

A. If Tapeo decided to purchase the electronic component from Streeter Company how much would its operating income increase or decrease? $

B. Should Tapeo continue to make the electronic component or buy it from Streeter Company?