Olive Corp. currently makes 12,600 subcomponents a year in one of its factories. The unit costs to produce are:

	Per unit
Direct materials		$	22
Direct labor			19
Variable manufacturing overhead			17
Fixed manufacturing overhead			9
Total unit cost		$	67

An outside supplier has offered to provide Olive Corp. with the 12,600 subcomponents at a $74 per unit price. Fixed overhead is not avoidable. If Olive Corp. rejects the outside offer, what will be the effect on short-term profits?

• $201,600 decrease

• $201,600 increase

• $113,400 decrease

• no change