The X Company operates a cafeteria for its employees. This year they expect to serve 20,000 meals and charge employees $8.00 a meal. The controller estimates that the cost to prepare and sell the 20,000 meals includes $80,000 in total variable costs and $65,000 in total fixed costs. An outside firm has offered to provide the 20,000 meals for $4.70 each. Twenty percent of the fixed costs would be eliminated if the outsourcing option is taken. The number of meals served and the revenue per meal is expected to be the same regardless of the outsourcing decision.

Assuming the company outsources the cafeteria, what is the financial impact (i.e., change in operating income) in dollars of accepting the outsourcing offer? In addition, in your answer make sure to indicate whether the financial impact would be an increase or decrease in the companys operating income.