Problem - Switze Corporation makes motorcycle engines. The company's recors show the following unit costs to manufacture part# 61645
Direct materials $12.00
Direct labor $15.00
Variable overhead $20.00
Fixed overhead $10.00
Another manufacturer has offered to supply Switzer Corporation with part# 61645 for a cost of $50 per unit. Switzer uses 1,000 units annually.
If Switzer accept the offer, what will be the short run impact on income?