Mulcahey Automobiles Company Fabricates Automobiles

Mulcahey Automobiles Company fabricates automobiles.Each vehicle includes one wiring harness,which is currently made in-house.Details of the harness fabrication are as follows:

An Indonesian factory has offered to supply Mulcahey with ready-made units for a cost of $16 per wiring harness.Assume that Mulcahey's fixed costs could be reduced by $5,000 if it outsources and that Mulcahey will not be able to use the excess capacity in any profitable manner.If Mulcahey decides to outsource,monthly operating income will ________.

A) increase by $12,000
B) decrease by $12,000
C) increase by $5,400
D) decrease by $4,000