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11. The LCell-Now Accessories Company manufacturers a cell phone accessory. This year they expect to...

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Accounting

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11. The LCell-Now Accessories Company manufacturers a cell phone accessory. This year they expect to produce and sell 25,000 accessories at a price of $10.00 each. The controller estimates that the cost to produce and sell the 25,000 accessories includes $87,500 in total variable costs and $25,000 in total fixed costs. An outside firm has offered to produce all 25,000 accessories for a total of $103,750. Thirty percent of the fixed costs would be eliminated if the outsourcing option is taken. The volume of accessories produced and sold and the revenue per unit is expected to be the same regardless of the outsourcing decision. 2 Required: Assuming the company outsources the production of the accessories, what is the financial impact (i.c., change in operating income) in dollars of accepting the outsourcing offer? In addition, in your answer make sure to indicate whether the financial impact would be an increase or decrease in the company's operating income

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