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Part $1$

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

$43$ comma $00043,000$

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\mathrm{.}00$$$1\mathrm{.}00$

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

$ $15$ comma $000$$$15,000.$

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

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Part $1$

A$.$

increase of $ $44$ comma $000$$$44,000$

B$.$

increase of $ $15$ comma $000$$$15,000$

C$.$

decrease of $ $44$ comma $000$$$44,000$

D$.$

decrease of $ $12$ comma $000$