Ring Company makes telephones. Currently, Ring makes all components of the telephones in$-$house. An outside company has offered to supply one component, part number X$76,$ for $$12$ each. Ring uses $22,000$ of these components per year. Costs of X$76$ are as follows:

Direct materials

$$3\mathrm{.}00$

Direct labor

$$1\mathrm{.}50$

Variable overhead

$$2\mathrm{.}75$

Fixed overhead

$$5\mathrm{.}00$

Refer to Figure $13-7.$ Assume that all of the fixed overhead is allocated and cannot be avoided. Should Ring purchase the part from the outside supplier?

Yes, income will increase by $$104,500.$

No$,$ income will decrease by $$104,500.$

Yes, income will increase by $$78,500.$

Yes, income will increase by $$95,500.$

Yes, income will increase by $$137,500.$