Voltaic Electronics uses a standard part in the manufacture of different types of radios. The total cost of producing

32 comma 00032,000

parts is

$ 100 comma 000$100,000?,

which includes fixed costs of

$ 40 comma 000$40,000

and variable costs of

$ 60 comma 000$60,000.

The company can buy the part from an outside supplier for

$ 1$1

per unit and avoid

3030?%

of the fixed costs. Assume that the company can use the freed manufacturing space to make another product that can earn a profit of

$ 16 comma 000$16,000.

If Voltaic? outsources, what will be the effect on operating? income?

A.

increase of $ 16 comma 000$16,000

B.

decrease of $ 56 comma 000$56,000

C.

increase of $ 56 comma 000$56,000

D.

decrease of $ 12 comma 000$12,000