Sharp Company produces 8,000 parts each year, which are used in the production of one of its products. The unit product cost of a part is $36, computed as follows: Variable production costs $16
Fixed production cost 20 (+)
Unit product cost $36 (=)
The parts can be purchased from an outside supplier for only $28 each. The space in which the parts are now produced would be idle and fixed production costs would be reduced by one-fourth. If the parts are purchased from the outside supplier, the annual impact on the company's operating income will be:
A .$24,000 increase
B. $24,000 decrease
C. $56,000 increase
D. $56,000 decrease