12. Lightning Semiconductors produces 400,000 hi-tech computer chips per month. Each chip uses a component which Lightning makes in-house. The variable costs to make the component are $1.20 per unit, and the fixed costs run to $1,200,000 per month. The company has been approached by a foreign producer who can supply the component, ready-made and with acceptable quality standards for $1.10 each. The fixed costs are unavoidable, and Lightning would have no other use for the facilities currently employed in making the component. What is the effect on operating income, if the company decides to outsource? There would be no effect on operating income. Lightning Semiconductors could save $40,000 per month in costs. Lightning Semiconductors costs would increase by $40,000 per month. Lightning Semiconductor's costs would go up by $10,000 per month. Lightning Semiconductors could save $1,200,000 per month in costs. 10. When a company is considering the option of processing its product further, to achieve higher sales revenues, they must ignore the: additional costs necessary to process further. incremental revenue that can be earned if processed further. increase in fixed costs. fact that will additional processing produce any environmental toxins. cost that is required to produce the basic product, before processing further (joint costs)