Vest Industries Manufactures 40,000 Components Per Year

Multiple Choice

Vest Industries manufactures 40,000 components per year.The manufacturing cost of the components was determined as follows: An outside supplier has offered to sell the component for $12.75.
What is the effect on income if Vest Industries purchases the component from the outside supplier?

A) $270,000 decrease
B) $270,000 increase
C) $30,000 decrease
D) $30,000 increase