M Corporation Makes Automobile Engines

Multiple Choice

M Corporation makes automobile engines.The company's records show the following costs to
Manufacture part #308FD:

Another manufacturer has offered to supply M Corporation with part #308FD for a cost of $50 per unit.M Corporation uses 1,000 units annually.If M Corporation accepts the offer,what will be the short-run impact on operating income?

A) Decrease in profits equal to $8,000.
B) Decrease in profits equal to $2,000.
C) Increase in profits equal to $8,000.
D) Increase in profits equal to $2,000.