Aircraft Products,a Manufacturer of Aircraft Landing Gear,makes 1,000 Units Each

Multiple Choice

Aircraft Products,a manufacturer of aircraft landing gear,makes 1,000 units each year of a special valve used in assembling one of its products.The unit cost of producing this valve includes variable costs of $70 and fixed costs of $60.The valves could be purchased from an outside supplier at $77 each.If the valve were purchased from the outside supplier,40% of the total fixed costs incurred in producing this valve could be eliminated.Buying the valves from the outside supplier instead of making them would cause the company's operating income to:

A) Increase by $26,000.
B) Increase by $17,000.
C) Decrease by $9,000.
D) Decrease by $29,000.