Waterway Industries incurs the following costs to produce 11800 units of a subcomponent:

Direct materials

$9912

Direct labor

13334

Variable overhead 14868

Fixed overhead

16200

An outside supplier has offered to sell Waterway the subcomponent for $3 a unit.

If Waterway accepts the offer, by how much will net income increase (decrease)?

O $(3422)

• S(12154)
• $2714

0 $18914