Anderson Co If Anderson Accepts the Order, $8 of Fixed Overhead Per

Multiple Choice

Anderson Co. makes and uses 5,000 components each year in its manufacturing operations. An outside supplier has offered to supply the components to Anderson at $66 per unit. Anderson's production costs are as follows:
$\begin{array}{|l|l|}\hline \text { Direct materials } & \$ 8 \\\hline \text { Direct labor } & 32 \\\hline \text { Variable overhead } & 12 \\\hline \text { Fixed overhead(based on normal capacity) } & 34 \\\hline\end{array}$
If Anderson accepts the order, $8 of fixed overhead per unit will be eliminated.
If the offer is accepted, operating income will

A) increase by $100,000.
B) decrease by $70,000.
C) decrease by $30,000.
D) increase by $60,000.